The Chemours Company (NYSE:CC) shares are down more than -42.06% this year and recently decreased -0.97% or -$0.16 to settle at $16.35. Agnico Eagle Mines Limited (NYSE:AEM), on the other hand, is up 40.07% year to date as of 09/12/2019. It currently trades at $56.59 and has returned -7.74% during the past week.
The Chemours Company (NYSE:CC) and Agnico Eagle Mines Limited (NYSE:AEM) are the two most active stocks in the Specialty Chemicals 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.
Companies that can increase earnings at a high compound rate over time are attractive to investors. Analysts expect CC to grow earnings at a 1.50% annual rate over the next 5 years. Comparatively, AEM is expected to grow at a 35.67% annual rate. All else equal, AEM’s higher growth rate would imply a greater potential for capital appreciation.
Growth doesn’t mean much if it comes at the cost of weak profitability. To adjust for differences in capital structure we’ll use EBITDA margin and Return on Investment (ROI) as measures of profitability and return. The Chemours Company (CC) has an EBITDA margin of 20.32%. This suggests that CC underlying business is more profitable CC’s ROI is 19.60% while AEM has a ROI of -4.20%. The interpretation is that CC’s business generates a higher return on investment than AEM’s.Cash Flow
Earnings don’t always accurately reflect the amount of cash that a company brings in. CC’s free cash flow (“FCF”) per share for the trailing twelve months was -0.95. Comparatively, AEM’s free cash flow per share was -0.72. On a percent-of-sales basis, CC’s free cash flow was -2.34% while AEM converted -7.83% of its revenues into cash flow. This means that, for a given level of sales, CC is able to generate more free cash flow for investors.
Liquidity and leverage ratios measure a company’s ability to meet short-term obligations and longer-term debts. CC has a current ratio of 2.00 compared to 1.30 for AEM. This means that CC can more easily cover its most immediate liabilities over the next twelve months. CC’s debt-to-equity ratio is 5.11 versus a D/E of 0.39 for AEM. CC is therefore the more solvent of the two companies, and has lower financial risk.Valuation
CC trades at a forward P/E of 4.15, a P/B of 3.26, and a P/S of 0.46, compared to a forward P/E of 42.84, a P/B of 2.87, and a P/S of 6.58 for AEM. 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. CC is currently priced at a -29.16% to its one-year price target of 23.08. Comparatively, AEM is -11.88% relative to its price target of 64.22. This suggests that CC 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. CC has a beta of 2.49 and AEM’s beta is -0.57. AEM’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. CC has a short ratio of 3.23 compared to a short interest of 3.44 for AEM. This implies that the market is currently less bearish on the outlook for CC.
The Chemours Company (NYSE:CC) beats Agnico Eagle Mines Limited (NYSE:AEM) on a total of 8 of the 14 factors compared between the two stocks. CC is more profitable, generates a higher return on investment, has a higher cash conversion rate and higher liquidity. In terms of valuation, CC is the cheaper of the two stocks on an earnings and sales basis, CC is more undervalued relative to its price target. Finally, CC has better sentiment signals based on short interest.