NovaGold Resources Inc. (NYSE:NG) shares are up more than 69.62% this year and recently decreased -1.76% or -$0.12 to settle at $6.70. Owens & Minor, Inc. (NYSE:OMI), on the other hand, is down -18.80% year to date as of 08/13/2019. It currently trades at $5.14 and has returned 80.35% during the past week.
NovaGold Resources Inc. (NYSE:NG) and Owens & Minor, Inc. (NYSE:OMI) are the two most active stocks in the Gold industry based on today’s trading volumes. We will compare the two companies based on the strength of various metrics, including growth, profitability, risk, return, and valuation to determine if one is a better investment than the other.
Companies that can consistently grow earnings at a high compound rate usually have the greatest potential to create value for shareholders in the long-run. Comparatively, OMI is expected to grow at a -11.16% annual rate. All else equal, NG’s higher growth rate would imply a greater potential for capital appreciation.
If there’s one thing investors care more about than earnings, it’s cash flow. NG’s free cash flow (“FCF”) per share for the trailing twelve months was -0.01. Comparatively, OMI’s free cash flow per share was +1.34.Liquidity and Financial Risk
Analysts look at liquidity and leverage ratios to assess how easily a company can cover its liabilities. NG has a current ratio of 76.60 compared to 1.70 for OMI. This means that NG can more easily cover its most immediate liabilities over the next twelve months. NG’s debt-to-equity ratio is 0.67 versus a D/E of 3.28 for OMI. OMI is therefore the more solvent of the two companies, and has lower financial risk.
NG trades at a P/B of 14.57, compared to a forward P/E of 6.77, a P/B of 0.62, and a P/S of 0.03 for OMI. 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
A cheap stock is not necessarily a value stock. Most of the time, a stock is cheap for good reason. A stock only has value if the current price is substantially below the price at which it should trade in the future.
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. NG has a beta of -0.27 and OMI’s beta is 1.54. NG’s shares are therefore the less volatile of the two stocks.Insider Activity and Investor Sentiment
The analysis of insider buying and selling trends can be extended to the aggregate level. Short interest, which represents the percentage of a stock’s tradable shares currently being shorted, captures what the market as a whole feels about a stock. NG has a short ratio of 7.87 compared to a short interest of 8.81 for OMI. This implies that the market is currently less bearish on the outlook for NG.
NovaGold Resources Inc. (NYSE:NG) beats Owens & Minor, Inc. (NYSE:OMI) on a total of 9 of the 12 factors compared between the two stocks. NG is growing fastly, generates a higher return on investment, higher liquidity and has lower financial risk. In terms of valuation, NG is the cheaper of the two stocks on an earnings and sales basis, Finally, NG has better sentiment signals based on short interest.