Top Ships Inc. (NASDAQ:TOPS) shares are down more than -19.76% this year and recently increased 3.28% or $0.01 to settle at $0.20. Rennova Health, Inc. (NASDAQ:RNVA), on the other hand, is down -78.13% year to date as of 02/14/2018. It currently trades at $0.01 and has returned -40.52% during the past week.
Top Ships Inc. (NASDAQ:TOPS) and Rennova Health, Inc. (NASDAQ:RNVA) are the two most active stocks in the market based on today’s trading volumes. To determine if one is a better investment than the other, we will compare the two companies’ growth, profitability, risk, return, and valuation characteristics, as well as their analyst ratings and sentiment signals.
Profitability and Returns
Growth isn’t very attractive to investors if companies are sacrificing profitability and shareholder returns to achieve that growth. We will use EBITDA margin and Return on Investment (ROI), which control for differences in capital structure between the two companies, to measure profitability and return. Top Ships Inc. (TOPS) has an EBITDA margin of 3.27%. This suggests that TOPS underlying business is more profitable TOPS’s ROI is 3.70% while RNVA has a ROI of 1582.90%. The interpretation is that RNVA’s business generates a higher return on investment than TOPS’s.
The amount of free cash flow available to investors is ultimately what determines the value of a stock. TOPS’s free cash flow (“FCF”) per share for the trailing twelve months was -68462.93. Comparatively, RNVA’s free cash flow per share was -2.78. On a percent-of-sales basis, TOPS’s free cash flow was -15522.36% while RNVA converted -0.3% of its revenues into cash flow. This means that, for a given level of sales, RNVA is able to generate more free cash flow for investors.
Liquidity and Financial Risk
Liquidity and leverage ratios are important because they reveal the financial health of a company. TOPS has a current ratio of 0.30 compared to 0.30 for RNVA. This means that TOPS can more easily cover its most immediate liabilities over the next twelve months.
TOPS trades at a P/B of 0.00, and a P/S of 0.34, compared to a P/S of 0.01 for RNVA. Given that earnings are what matter most to investors, analysts tend to place a greater weight on the P/E.
Analyst Price Targets and Opinions
Investors often compare a stock’s current price to an analyst price target to get a sense of the potential upside within the next year. TOPS is currently priced at a -99.97% to its one-year price target of 750.00. Comparatively, RNVA is -100% relative to its price target of 555.00. This suggests that RNVA is the better investment over the next year.
Risk and Volatility
Beta is an important measure that gives investors a sense of the market risk associated with a particular stock. A beta above 1 signals above average market risk, while a beta below 1 implies below average volatility. TOPS has a beta of 0.68 and RNVA’s beta is -0.61. RNVA’s shares are therefore the less volatile of the two stocks.
Rennova Health, Inc. (NASDAQ:RNVA) beats Top Ships Inc. (NASDAQ:TOPS) on a total of 9 of the 13 factors compared between the two stocks. RNVA is more profitable, has higher cash flow per share, has a higher cash conversion rate and has lower financial risk. RNVA is more undervalued relative to its price target. Finally, RNVA has better sentiment signals based on short interest.