The shares of Workday, Inc. have increased by more than 61.20% this year alone. The shares recently went down by -7.16% or -$8.22 and now trades at $106.54. The shares of Entegris, Inc. (NASDAQ:ENTG), has jumped by 66.48% year to date as of 11/28/2017. The shares currently trade at $29.80 and have been able to report a change of -8.59% over the past one week.
The stock of Workday, Inc. and Entegris, Inc. were two of the most active stocks on Tueday. 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.
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 Return on Investment (ROI), which balances the difference in capital structure. The ROI of WDAY is -21.60% while that of ENTG is 8.90%. These figures suggest that ENTG ventures generate a higher ROI than that of WDAY.
The value of a stock is ultimately determined by the amount of cash flow that the investors have available. Over the last 12 months, WDAY’s free cash flow per share is a negative -1.46, while that of ENTG is positive 5.29.
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 WDAY is 1.50 and that of ENTG is 3.10. This implies that it is easier for WDAY to cover its immediate obligations over the next 12 months than ENTG. The debt ratio of WDAY is 0.40 compared to 0.50 for ENTG. ENTG can be able to settle its long-term debts and thus is a lower financial risk than WDAY.
WDAY currently trades at a forward P/E of 96.42, a P/B of 16.09, and a P/S of 11.87 while ENTG trades at a forward P/E of 18.36, a P/B of 4.14, and a P/S of 3.21. This means that looking at the earnings, book values and sales basis, ENTG 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 WDAY is currently at a -0.52% to its one-year price target of 107.10. Looking at its rival pricing, ENTG is at a -14.32% relative to its price target of 34.78. This figure implies that over the next one year, ENTG is a better investment.
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), WDAY is given a 2.70 while 2.10 placed for ENTG. This means that analysts are more bullish on the outlook for WDAY 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 WDAY is 8.38 while that of ENTG is just 3.16. This means that analysts are more bullish on the forecast for ENTG stock.
The stock of Workday, Inc. defeats that of Entegris, Inc. when the two are compared, with WDAY taking 1 out of the total factors that were been considered. WDAY 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, WDAY is the cheaper one on an earnings, book value and sales basis. Finally, the sentiment signal for WDAY is better on when it is viewed on short interest.