The shares of Baker Hughes, a GE company have increased by more than 15.04% this year alone. The shares recently went up by 0.30% or $0.11 and now trades at $36.40. The shares of Adobe Systems Incorporated (NASDAQ:ADBE), has jumped by 36.26% year to date as of 05/22/2018. The shares currently trade at $238.79 and have been able to report a change of 0.93% over the past one week.
The stock of Baker Hughes, a GE company and Adobe Systems Incorporated 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 EBITDA margin and Return on Investment (ROI), which balances the difference in capital structure. The ROI of BHGE is -0.70% while that of ADBE is 16.70%. These figures suggest that ADBE ventures generate a higher ROI than that of BHGE.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, BHGE’s free cash flow per share is a positive 0.24, while that of ADBE is positive 12.07.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 BHGE is 2.00 and that of ADBE is 2.10. This implies that it is easier for BHGE to cover its immediate obligations over the next 12 months than ADBE. The debt ratio of BHGE is 0.20 compared to 0.22 for ADBE. ADBE can be able to settle its long-term debts and thus is a lower financial risk than BHGE.Valuation
BHGE currently trades at a forward P/E of 23.02, a P/B of 0.40, and a P/S of 2.03 while ADBE trades at a forward P/E of 32.62, a P/B of 13.61, and a P/S of 15.26. This means that looking at the earnings, book values and sales basis, BHGE 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 BHGE is currently at a -1.09% to its one-year price target of 36.80. Looking at its rival pricing, ADBE is at a -3.83% relative to its price target of 248.31.
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), BHGE is given a 2.30 while 1.90 placed for ADBE. This means that analysts are more bullish on the outlook for BHGE 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 BHGE is 4.33 while that of ADBE is just 1.76. This means that analysts are more bullish on the forecast for ADBE stock.
The stock of Baker Hughes, a GE company defeats that of Adobe Systems Incorporated when the two are compared, with BHGE taking 5 out of the total factors that were been considered. BHGE 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, BHGE is the cheaper one on an earnings, book value and sales basis. Finally, the sentiment signal for BHGE is better on when it is viewed on short interest.