Earnings

Financially Devastating or Fantastic? – Nielsen Holdings plc (NLSN), Endeavour Silver Corp. (EXK)

The shares of Nielsen Holdings plc have decreased by more than -11.15% this year alone. The shares recently went down by -0.46% or -$0.15 and now trades at $32.34. The shares of Endeavour Silver Corp. (NYSE:EXK), has jumped by 17.57% year to date as of 04/13/2018. The shares currently trade at $2.81 and have been able to report a change of 16.12% over the past one week.

The stock of Nielsen Holdings plc and Endeavour Silver Corp. were two of the most active stocks on Friday. 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 EBITDA margin and Return on Investment (ROI), which balances the difference in capital structure. NLSN has an EBITDA margin of 19.52%, this implies that the underlying business of NLSN is more profitable. The ROI of NLSN is 7.40% while that of EXK is 6.50%. These figures suggest that NLSN ventures generate a higher ROI than that of EXK.

Cash Flow

The value of a stock is ultimately determined by the amount of cash flow that the investors have available. Over the last 12 months, NLSN’s free cash flow per share is a positive 4.88.

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 NLSN is 1.30 and that of EXK is 4.00. This implies that it is easier for NLSN to cover its immediate obligations over the next 12 months than EXK. The debt ratio of NLSN is 1.99 compared to 0.00 for EXK. NLSN can be able to settle its long-term debts and thus is a lower financial risk than EXK.

Valuation

NLSN currently trades at a forward P/E of 17.52, a P/B of 2.71, and a P/S of 1.76 while EXK trades at a forward P/E of 14.41, a P/B of 2.44, and a P/S of 2.38. This means that looking at the earnings, book values and sales basis, NLSN 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 NLSN is currently at a -20.6% to its one-year price target of 40.73. Looking at its rival pricing, EXK is at a -37.97% relative to its price target of 4.53.




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), NLSN is given a 2.20 while 2.40 placed for EXK. This means that analysts are more bullish on the outlook for EXK 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 NLSN is 6.02 while that of EXK is just 4.10. This means that analysts are more bullish on the forecast for EXK stock.

Conclusion

The stock of Nielsen Holdings plc defeats that of Endeavour Silver Corp. when the two are compared, with NLSN taking 7 out of the total factors that were been considered. NLSN 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, NLSN is the cheaper one on an earnings, book value and sales basis. Finally, the sentiment signal for NLSN is better on when it is viewed on short interest.

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