Frank’s International N.V. (NYSE:FI) shares are down more than -2.26% this year and recently decreased -7.80% or -$0.55 to settle at $6.50. Boston Properties, Inc. (NYSE:BXP), on the other hand, is up 1.88% year to date as of 12/06/2018. It currently trades at $132.48 and has returned 1.93% during the past week.
Frank’s International N.V. (NYSE:FI) and Boston Properties, Inc. (NYSE:BXP) are the two most active stocks based on recent trading volumes. We will compare the two companies based on the strength of various metrics, including growth, profitability, risk, return, and valuation to determine if one is a better investment than the other.Growth
The ability to grow earnings at a compound rate over time is a crucial determinant of investment value. Comparatively, BXP is expected to grow at a 7.00% annual rate. All else equal, BXP’s higher growth rate would imply a greater potential for capital appreciation.Profitability and Returns
Growth isn’t very attractive to investors if companies are sacrificing profitability and shareholder returns to achieve that growth. We will use EBITDA margin and Return on Investment (ROI), which control for differences in capital structure between the two companies, to measure profitability and return. EBITDA margin of 57.69% for Boston Properties, Inc. (BXP). FI’s ROI is -23.60% while BXP has a ROI of 5.70%. The interpretation is that BXP’s business generates a higher return on investment than FI’s.Cash Flow
Earnings don’t always accurately reflect the amount of cash that a company brings in. FI’s free cash flow (“FCF”) per share for the trailing twelve months was +0.00. Comparatively, BXP’s free cash flow per share was -1.10. On a percent-of-sales basis, FI’s free cash flow was 0% while BXP converted -6.53% of its revenues into cash flow. This means that, for a given level of sales, FI is able to generate more free cash flow for investors.Liquidity and Financial Risk
FI’s debt-to-equity ratio is 0.00 versus a D/E of 1.92 for BXP. BXP is therefore the more solvent of the two companies, and has lower financial risk.
FI trades at a P/B of 1.39, and a P/S of 3.05, compared to a forward P/E of 42.58, a P/B of 3.60, and a P/S of 7.67 for BXP. FI is the cheaper of the two stocks on an earnings, book value and sales basis. Given that earnings are what matter most to investors, analysts tend to place a greater weight on the P/E.
Analyst Price Targets and Opinions
When investing it’s crucial to distinguish between price and value. As Warren Buffet said, “price is what you pay, value is what you get”. FI is currently priced at a -10.59% to its one-year price target of 7.27. Comparatively, BXP is -2.08% relative to its price target of 135.30. This suggests that FI is the better investment over the next year.
Risk and Volatility
Beta is a metric that investors frequently use to analyze a stock’s systematic risk. A beta above 1 implies above average market volatility. Conversely, a stock with a beta below 1 is seen as less risky than the overall market. FI has a beta of 1.44 and BXP’s beta is 0.61. BXP’s shares are therefore the less volatile of the two stocks.Insider Activity and Investor Sentiment
Analysts often look at short interest, or the percentage of a company’s float currently being shorted by investors, to aid in their outlook for a particular stock. FI has a short ratio of 9.34 compared to a short interest of 2.67 for BXP. This implies that the market is currently less bearish on the outlook for BXP.Summary
Frank’s International N.V. (NYSE:FI) beats Boston Properties, Inc. (NYSE:BXP) on a total of 8 of the 14 factors compared between the two stocks. FI has higher cash flow per share, has a higher cash conversion rate, higher liquidity and has lower financial risk. In terms of valuation, FI is the cheaper of the two stocks on an earnings, book value and sales basis, FI is more undervalued relative to its price target. Finally, CBD has better sentiment signals based on short interest.