Citizens Financial Group, Inc. (NYSE:CFG) shares are up more than 22.33% this year and recently increased 0.44% or $0.16 to settle at $36.37. Uranium Energy Corp. (NYSE:UEC), on the other hand, is down -21.55% year to date as of 09/12/2019. It currently trades at $0.98 and has returned 0.85% during the past week.
Citizens Financial Group, Inc. (NYSE:CFG) and Uranium Energy Corp. (NYSE:UEC) are the two most active stocks in the Regional – Mid-Atlantic Banks industry based on today’s trading volumes. Investors are clearly interested in the two names, but is one a better choice than the other? We will compare the two companies across growth, profitability, risk, valuation, and insider trends to answer this question.
The ability to consistently grow earnings at a high compound rate is a defining characteristic of the best companies for long-term investment. Analysts expect CFG to grow earnings at a 6.78% annual rate over the next 5 years.
A high growth rate isn’t necessarily valuable to investors. In fact, companies that overinvest in low return projects just to achieve a high growth rate can actually destroy shareholder value. Profitability and returns are a measure of the quality of a company’s business and its growth opportunities. We’ll use EBITDA margin and Return on Investment (ROI) to measure this. Citizens Financial Group, Inc. (CFG) has an EBITDA margin of 67.78%. This suggests that CFG underlying business is more profitableCash Flow
Earnings don’t always accurately reflect the amount of cash that a company brings in. CFG’s free cash flow (“FCF”) per share for the trailing twelve months was +0.98. Comparatively, UEC’s free cash flow per share was -0.02.
CFG’s debt-to-equity ratio is 0.55 versus a D/E of 0.24 for UEC. CFG is therefore the more solvent of the two companies, and has lower financial risk.
CFG trades at a forward P/E of 9.04, a P/B of 0.80, and a P/S of 2.64, compared to a P/B of 2.23, for UEC. CFG is the cheaper of the two stocks on book value basis but is expensive in terms of P/E and P/S ratio. 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
Investors often compare a stock’s current price to an analyst price target to get a sense of the potential upside within the next year. CFG is currently priced at a -12.68% to its one-year price target of 41.65. Comparatively, UEC is -70.03% relative to its price target of 3.27. This suggests that UEC is the better investment over the next year.
Risk and Volatility
No discussion on value is complete without taking into account risk. Analysts use a stock’s beta, which measures the volatility of a stock compared to the overall market, to measure systematic risk. A stock with a beta above 1 is more volatile than the market. Conversely, a beta below 1 implies a below average level of risk. CFG has a beta of 1.45 and UEC’s beta is 1.47. CFG’s shares are therefore the less volatile of the two stocks.Insider Activity and Investor Sentiment
Short interest is another tool that analysts use to gauge investor sentiment. It represents the percentage of a stock’s tradable shares that are being shorted. CFG has a short ratio of 1.38 compared to a short interest of 13.44 for UEC. This implies that the market is currently less bearish on the outlook for CFG.
Citizens Financial Group, Inc. (NYSE:CFG) beats Uranium Energy Corp. (NYSE:UEC) on a total of 7 of the 13 factors compared between the two stocks. CFG is growing fastly, is more profitable, generates a higher return on investment and has higher cash flow per share. Finally, CFG has better sentiment signals based on short interest.