The shares of MDC Partners Inc. have decreased by more than -66.36% this year alone. The shares recently went up by 31.20% or $0.78 and now trades at $3.28. The shares of Equinor ASA (NYSE:EQNR), has jumped by 7.38% year to date as of 12/06/2018. The shares currently trade at $23.00 and have been able to report a change of -1.79% over the past one week.
The stock of MDC Partners Inc. and Equinor ASA 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.Next 5Y EPS Growth: 6.00% versus 18.50%
When a company is able to grow consistently in terms of earnings at a high compound rate have the highest likelihood of creating value for its shareholders over time. Analysts have predicted that MDCA will grow it’s earning at a 6.00% annual rate in the next 5 years. This is in contrast to EQNR which will have a positive growth at a 18.50% annual rate. This means that the higher growth rate of EQNR implies a greater potential for capital appreciation over the years.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. MDCA has an EBITDA margin of 8.17%, this implies that the underlying business of MDCA is more profitable. The ROI of MDCA is 34.10% while that of EQNR is 7.30%. These figures suggest that MDCA ventures generate a higher ROI than that of EQNR.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, MDCA’s free cash flow per share is a positive 1.6, while that of EQNR is positive 21.6.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 current ratio for MDCA is 0.80 and that of EQNR is 1.40. This implies that it is easier for MDCA to cover its immediate obligations over the next 12 months than EQNR.Valuation
MDCA currently trades at a forward P/E of 6.04, and a P/S of 0.13 while EQNR trades at a forward P/E of 8.91, a P/B of 1.83, and a P/S of 1.04. This means that looking at the earnings, book values and sales basis, MDCA 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 MDCA is currently at a -36.56% to its one-year price target of 5.17. Looking at its rival pricing, EQNR is at a -21.95% relative to its price target of 29.47.
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), MDCA is given a 2.00 while 2.00 placed for EQNR. This means that analysts are equally bullish on their outlook for the two stocks 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 MDCA is 2.09 while that of EQNR is just 4.11. This means that analysts are more bullish on the forecast for MDCA stock.
The stock of Equinor ASA defeats that of MDC Partners Inc. when the two are compared, with EQNR taking 5 out of the total factors that were been considered. EQNR 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, EQNR is the cheaper one on an earnings, book value and sales basis. Finally, the sentiment signal for EQNR is better on when it is viewed on short interest.