The shares of Knight-Swift Transportation Holdings Inc. have decreased by more than -29.99% this year alone. The shares recently went down by -9.86% or -$3.35 and now trades at $30.61. The shares of Omega Healthcare Investors, Inc. (NYSE:OHI), has jumped by 37.40% year to date as of 12/04/2018. The shares currently trade at $37.84 and have been able to report a change of 3.56% over the past one week.
The stock of Knight-Swift Transportation Holdings Inc. and Omega Healthcare Investors, Inc. were two of the most active stocks on Tuesday. 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: 27.37% versus 15.80%
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 KNX will grow it’s earning at a 27.37% annual rate in the next 5 years. This is in contrast to OHI which will have a positive growth at a 15.80% annual rate. This means that the higher growth rate of KNX 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. KNX has an EBITDA margin of 20.33%, this implies that the underlying business of OHI is more profitable. The ROI of KNX is 2.10% while that of OHI is 3.20%. These figures suggest that OHI ventures generate a higher ROI than that of KNX.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, KNX’s free cash flow per share is a positive 0.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 debt ratio of KNX is 0.18 compared to 1.33 for OHI. OHI can be able to settle its long-term debts and thus is a lower financial risk than KNX.Valuation
KNX currently trades at a forward P/E of 11.35, a P/B of 1.00, and a P/S of 1.00 while OHI trades at a forward P/E of 21.38, a P/B of 2.20, and a P/S of 8.61. This means that looking at the earnings, book values and sales basis, KNX 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 KNX is currently at a -30.68% to its one-year price target of 44.16. Looking at its rival pricing, OHI is at a 10.74% relative to its price target of 34.17.
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), KNX is given a 1.80 while 2.70 placed for OHI. This means that analysts are more bullish on the outlook for OHI 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 KNX is 10.44 while that of OHI is just 11.09. This means that analysts are more bullish on the forecast for KNX stock.
The stock of Omega Healthcare Investors, Inc. defeats that of Knight-Swift Transportation Holdings Inc. when the two are compared, with OHI taking 3 out of the total factors that were been considered. OHI 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, OHI is the cheaper one on an earnings, book value and sales basis. Finally, the sentiment signal for OHI is better on when it is viewed on short interest.