The shares of PG&E Corporation have decreased by more than -2.92% this year alone. The shares recently went down by -0.57% or -$0.25 and now trades at $43.52. The shares of Navios Maritime Holdings Inc. (NYSE:NM), has jumped by 12.50% year to date as of 01/04/2018. The shares currently trade at $1.35 and have been able to report a change of 6.30% over the past one week.
The stock of PG&E Corporation and Navios Maritime Holdings 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.
Next 5Y EPS Growth: 2.08% versus 33.40%
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 PCG will grow it’s earning at a 2.08% annual rate in the next 5 years. This is in contrast to NM which will have a positive growth at a 33.40% annual rate. This means that the higher growth rate of NM 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. PCG has an EBITDA margin of 20.69%, this implies that the underlying business of PCG is more profitable. The ROI of PCG is 5.80% while that of NM is 0.50%. These figures suggest that PCG ventures generate a higher ROI than that of NM.
The value of a stock is ultimately determined by the amount of cash flow that the investors have available. Over the last 12 months, PCG’s free cash flow per share is a positive 1.43.
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 PCG is 0.90 and that of NM is 1.00. This implies that it is easier for PCG to cover its immediate obligations over the next 12 months than NM. The debt ratio of PCG is 0.96 compared to 2.80 for NM. NM can be able to settle its long-term debts and thus is a lower financial risk than PCG.
PCG currently trades at a forward P/E of 11.40, a P/B of 1.17, and a P/S of 1.26 while NM trades at a P/B of 0.28, and a P/S of 0.37. This means that looking at the earnings, book values and sales basis, PCG 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 PCG is currently at a -24.97% to its one-year price target of 58.00. Looking at its rival pricing, NM is at a -89.85% relative to its price target of 13.30. This figure implies that over the next one year, NM 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), PCG is given a 2.60.
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 PCG is 1.02 while that of NM is just 6.18. This means that analysts are more bullish on the forecast for PCG stock.
The stock of PG&E Corporation defeats that of Navios Maritime Holdings Inc. when the two are compared, with PCG taking 7 out of the total factors that were been considered. PCG 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, PCG is the cheaper one on an earnings, book value and sales basis. Finally, the sentiment signal for PCG is better on when it is viewed on short interest.