Global

Set Sail With Sirius XM Holdings Inc. (SIRI), Constellium N.V (CSTM)

The shares of Sirius XM Holdings Inc. have increased by more than 2.61% this year alone. The shares recently went down by -0.99% or -$0.05 and now trades at $5.50. The shares of Constellium N.V (NYSE:CSTM), has jumped by 11.21% year to date as of 01/11/2018. The shares currently trade at $12.40 and have been able to report a change of 3.77% over the past one week.

The stock of Sirius XM Holdings Inc. and Constellium N.V 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.

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. SIRI has an EBITDA margin of 35.59%, this implies that the underlying business of SIRI is more profitable. The ROI of SIRI is 21.00% while that of CSTM is 9.40%. These figures suggest that SIRI ventures generate a higher ROI than that of CSTM.



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, SIRI’s free cash flow per share is a positive 7.34, while that of CSTM is positive 0.4.

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 SIRI is 0.20 and that of CSTM is 1.20. This implies that it is easier for SIRI to cover its immediate obligations over the next 12 months than CSTM.

Valuation

SIRI currently trades at a forward P/E of 26.57, and a P/S of 4.73 while CSTM trades at a forward P/E of 13.84, and a P/S of 0.27. This means that looking at the earnings, book values and sales basis, SIRI 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 SIRI is currently at a -5.5% to its one-year price target of 5.82. Looking at its rival pricing, CSTM is at a -5.34% relative to its price target of 13.10. This figure implies that over the next one year, CSTM 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), SIRI is given a 2.40 while 2.30 placed for CSTM. This means that analysts are more bullish on the outlook for SIRI 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 SIRI is 11.93 while that of CSTM is just 0.38. This means that analysts are more bullish on the forecast for CSTM stock.

Conclusion

The stock of Sirius XM Holdings Inc. defeats that of Constellium N.V when the two are compared, with SIRI taking 5 out of the total factors that were been considered. SIRI 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, SIRI is the cheaper one on an earnings, book value and sales basis. Finally, the sentiment signal for SIRI is better on when it is viewed on short interest.

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