Earnings

Which is more compelling pick right now? – Ladder Capital Corp (LADR), Helmerich & Payne, Inc. (HP)

The shares of Ladder Capital Corp have increased by more than 31.69% this year alone. The shares recently went up by 2.40% or $0.42 and now trades at $17.95. The shares of Helmerich & Payne, Inc. (NYSE:HP), has slumped by -6.93% year to date as of 12/06/2018. The shares currently trade at $60.16 and have been able to report a change of -0.92% over the past one week.

The stock of Ladder Capital Corp and Helmerich & Payne, Inc. were two of the most active stocks on Thursday. Investors seem to be very interested in what happens to the stocks of these two companies but do investors favor one over the other? We will analyze the growth, profitability, risk, valuation, and insider trends of both companies and see which one investors prefer.

Profitability and Returns

Growth alone cannot be used to see if the company will be valuable. Shareholders will be the losers if a company invest in ventures that aren’t profitable enough to support upbeat growth. In order for us to accurately measure profitability and return, we will be using the EBITDA margin and Return on Investment (ROI), which balances the difference in capital structure. LADR has an EBITDA margin of 146.94%, this implies that the underlying business of LADR is more profitable. The ROI of LADR is 2.20% while that of HP is 0.10%. These figures suggest that LADR ventures generate a higher ROI than that of HP.

Cash Flow

The value of a stock is ultimately determined by the amount of cash flow that the investors have available. Over the last 12 months, LADR’s free cash flow per share is a negative -0.22, while that of HP is also a negative -1.45.

Liquidity and Financial Risk



The ability of a company to meet up with its short-term obligations and be able to clear its longer-term debts is measured using Liquidity and leverage ratios. The debt ratio of LADR is 3.51 compared to 0.11 for HP. LADR can be able to settle its long-term debts and thus is a lower financial risk than HP.

Valuation

LADR currently trades at a forward P/E of 9.96, a P/B of 1.28, and a P/S of 3.28 while HP trades at a forward P/E of 20.11, a P/B of 1.50, and a P/S of 2.66. This means that looking at the earnings, book values and sales basis, LADR is the cheaper one. It is very obvious that earnings are the most important factors to investors, thus analysts are most likely to place their bet on the P/E.

Analyst Price Targets and Opinions

The mistake some people make is that they think a cheap stock has more value to it. In order to know the value of a stock, there is need to compare its current price to its likely trading price in the future. The price of LADR is currently at a -1.43% to its one-year price target of 18.21. Looking at its rival pricing, HP is at a -16.95% relative to its price target of 72.44.




When looking at the investment recommendation on say a scale of 1 to 5 (1 being a strong buy, 3 a hold, and 5 a sell), LADR is given a 1.90 while 2.60 placed for HP. This means that analysts are more bullish on the outlook for HP stocks.

Insider Activity and Investor Sentiment

Short interest or otherwise called the percentage of a stock’s tradable shares currently being shorted is another data that investors use to get a handle on sentiment. The short ratio for LADR is 2.39 while that of HP is just 7.15. This means that analysts are more bullish on the forecast for LADR stock.

Conclusion

The stock of Helmerich & Payne, Inc. defeats that of Ladder Capital Corp when the two are compared, with HP taking 5 out of the total factors that were been considered. HP happens to be more profitable, generates a higher ROI, has higher cash flow per share, higher liquidity and has a lower financial risk. When looking at the stock valuation, HP is the cheaper one on an earnings, book value and sales basis. Finally, the sentiment signal for HP is better on when it is viewed on short interest.

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