The shares of Cabot Oil & Gas Corporation have increased by more than 14.99% this year alone. The shares of Lattice Semiconductor Corporation (NASDAQ:LSCC), has jumped by 73.55% year to date as of 05/28/2019. The shares currently trade at $12.01 and have been able to report a change of 4.89% over the past one week.
The stock of Cabot Oil & Gas Corporation and Lattice Semiconductor Corporation were two of the most active stocks on Tuesday. 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: 40.18% versus 20.00%
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 COG will grow it’s earning at a 40.18% annual rate in the next 5 years. This is in contrast to LSCC which will have a positive growth at a 20.00% annual rate. This means that the higher growth rate of COG 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. COG has an EBITDA margin of 58.53%, this implies that the underlying business of COG is more profitable. The ROI of COG is 18.70% while that of LSCC is -1.10%. These figures suggest that COG ventures generate a higher ROI than that of LSCC.
The value of a stock is ultimately determined by the amount of cash flow that the investors have available. Over the last 12 months, COG’s free cash flow per share is a positive 16.44.
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 COG is 2.80 and that of LSCC is 4.00. This implies that it is easier for COG to cover its immediate obligations over the next 12 months than LSCC. The debt ratio of COG is 0.00 compared to 0.83 for LSCC. LSCC can be able to settle its long-term debts and thus is a lower financial risk than COG.
COG currently trades at a forward P/E of 13.73, a P/B of 4.68, and a P/S of 4.60 while LSCC trades at a forward P/E of 19.47, a P/B of 5.59, and a P/S of 3.89. This means that looking at the earnings, book values and sales basis, COG 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 COG is currently at a -10.58% to its one-year price target of 28.74. Looking at its rival pricing, LSCC is at a -18.8% relative to its price target of 14.79.
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), COG is given a 2.50 while 1.70 placed for LSCC. This means that analysts are more bullish on the outlook for COG 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 COG is 4.34 while that of LSCC is just 1.60. This means that analysts are more bullish on the forecast for LSCC stock.
The stock of Lattice Semiconductor Corporation defeats that of Cabot Oil & Gas Corporation when the two are compared, with LSCC taking 5 out of the total factors that were been considered. LSCC 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, LSCC is the cheaper one on an earnings, book value and sales basis. Finally, the sentiment signal for LSCC is better on when it is viewed on short interest.