Earnings

Set Sail With Pilgrim’s Pride Corporation (PPC), Bristow Group Inc. (BRS)

The shares of Pilgrim’s Pride Corporation have decreased by more than -41.37% this year alone. The shares recently went down by -7.89% or -$1.56 and now trades at $18.21. The shares of Bristow Group Inc. (NYSE:BRS), has slumped by -70.38% year to date as of 12/04/2018. The shares currently trade at $3.99 and have been able to report a change of -3.16% over the past one week.

The stock of Pilgrim’s Pride Corporation and Bristow Group 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.

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 PPC is 16.90% while that of BRS is -5.30%. These figures suggest that PPC ventures generate a higher ROI than that of BRS.

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, PPC’s free cash flow per share is a positive 0.3, while that of BRS is positive 0.62.

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 PPC is 1.70 and that of BRS is 2.20. This implies that it is easier for PPC to cover its immediate obligations over the next 12 months than BRS. The debt ratio of PPC is 1.13 compared to 1.50 for BRS. BRS can be able to settle its long-term debts and thus is a lower financial risk than PPC.

Valuation

PPC currently trades at a forward P/E of 9.99, a P/B of 2.20, and a P/S of 0.41 while BRS trades at a P/B of 0.15, and a P/S of 0.10. This means that looking at the earnings, book values and sales basis, PPC 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 PPC is currently at a -18.45% to its one-year price target of 22.33. Looking at its rival pricing, BRS is at a -69.89% relative to its price target of 13.25.




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), PPC is given a 2.60 while 2.80 placed for BRS. This means that analysts are more bullish on the outlook for BRS 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 PPC is 5.75 while that of BRS is just 7.76. This means that analysts are more bullish on the forecast for PPC stock.

Conclusion

The stock of Pilgrim’s Pride Corporation defeats that of Bristow Group Inc. when the two are compared, with PPC taking 5 out of the total factors that were been considered. PPC 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, PPC is the cheaper one on an earnings, book value and sales basis. Finally, the sentiment signal for PPC is better on when it is viewed on short interest.

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