The shares of Kinder Morgan, Inc. have increased by more than 32.77% this year alone. The shares recently went down by -0.15% or -$0.03 and now trades at $20.42. The shares of RPC, Inc. (NYSE:RES), has slumped by -43.36% year to date as of 09/12/2019. The shares currently trade at $5.59 and have been able to report a change of 6.88% over the past one week.
The stock of Kinder Morgan, Inc. and RPC, 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.
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. KMI has an EBITDA margin of 21.65%, this implies that the underlying business of KMI is more profitable. The ROI of KMI is 4.10% while that of RES is 17.30%. These figures suggest that RES ventures generate a higher ROI than that of KMI.
The value of a stock is ultimately determined by the amount of cash flow that the investors have available. Over the last 12 months, KMI’s free cash flow per share is a positive 2.24, while that of RES is negative -3.74.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 KMI is 0.40 and that of RES is 3.10. This implies that it is easier for KMI to cover its immediate obligations over the next 12 months than RES. The debt ratio of KMI is 1.07 compared to 0.00 for RES. KMI can be able to settle its long-term debts and thus is a lower financial risk than RES.
KMI currently trades at a forward P/E of 18.70, a P/B of 1.37, and a P/S of 3.33 while RES trades at a forward P/E of 42.35, a P/B of 1.29, and a P/S of 0.78. This means that looking at the earnings, book values and sales basis, KMI 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 KMI is currently at a -8.02% to its one-year price target of 22.20. Looking at its rival pricing, RES is at a -7.91% relative to its price target of 6.07.
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), KMI is given a 2.20 while 3.40 placed for RES. This means that analysts are more bullish on the outlook for RES 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 KMI is 4.50 while that of RES is just 10.36. This means that analysts are more bullish on the forecast for KMI stock.
The stock of RPC, Inc. defeats that of Kinder Morgan, Inc. when the two are compared, with RES taking 5 out of the total factors that were been considered. RES 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, RES is the cheaper one on an earnings, book value and sales basis. Finally, the sentiment signal for RES is better on when it is viewed on short interest.