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Choosing Between Hot Stocks: Comcast Corporation (CMCSA), Allscripts Healthcare Solutions, Inc. (MDRX)

The shares of Comcast Corporation have increased by more than 6.37% this year alone. The shares recently went up by 3.67% or $1.51 and now trades at $42.60. The shares of Allscripts Healthcare Solutions, Inc. (NASDAQ:MDRX), has jumped by 9.55% year to date as of 01/11/2018. The shares currently trade at $15.94 and have been able to report a change of 5.01% over the past one week.

The stock of Comcast Corporation and Allscripts Healthcare Solutions, 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: 8.68% versus 18.00%

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 CMCSA will grow it’s earning at a 8.68% annual rate in the next 5 years. This is in contrast to MDRX which will have a positive growth at a 18.00% annual rate. This means that the higher growth rate of MDRX 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. CMCSA has an EBITDA margin of 33.71%, this implies that the underlying business of CMCSA is more profitable. The ROI of CMCSA is 10.00% while that of MDRX is 3.00%. These figures suggest that CMCSA ventures generate a higher ROI than that of MDRX.

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, CMCSA’s free cash flow per share is a positive 2.38, while that of MDRX is positive 3.15.

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 CMCSA is 0.70 and that of MDRX is 1.00. This implies that it is easier for CMCSA to cover its immediate obligations over the next 12 months than MDRX. The debt ratio of CMCSA is 1.17 compared to 1.28 for MDRX. MDRX can be able to settle its long-term debts and thus is a lower financial risk than CMCSA.

Valuation

CMCSA currently trades at a forward P/E of 19.19, a P/B of 3.61, and a P/S of 2.36 while MDRX trades at a forward P/E of 20.95, a P/B of 2.60, and a P/S of 1.68. This means that looking at the earnings, book values and sales basis, CMCSA 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 CMCSA is currently at a -5.06% to its one-year price target of 44.87. Looking at its rival pricing, MDRX is at a 0.63% relative to its price target of 15.84. This figure implies that over the next one year, MDRX 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), CMCSA is given a 1.70 while 2.20 placed for MDRX. This means that analysts are more bullish on the outlook for MDRX 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 CMCSA is 2.38 while that of MDRX is just 7.39. This means that analysts are more bullish on the forecast for CMCSA stock.

Conclusion

The stock of Allscripts Healthcare Solutions, Inc. defeats that of Comcast Corporation when the two are compared, with MDRX taking 5 out of the total factors that were been considered. MDRX 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, MDRX is the cheaper one on an earnings, book value and sales basis. Finally, the sentiment signal for MDRX is better on when it is viewed on short interest.

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