The shares of Fiat Chrysler Automobiles N.V. have increased by more than 19.23% this year alone. The shares recently went up by 5.14% or $1.04 and now trades at $21.27. The shares of Sterling Bancorp (NYSE:STL), has jumped by 1.42% year to date as of 03/06/2018. The shares currently trade at $24.95 and have been able to report a change of 5.94% over the past one week.
The stock of Fiat Chrysler Automobiles N.V. and Sterling Bancorp 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: 20.11% versus 5.00%
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 FCAU will grow it’s earning at a 20.11% annual rate in the next 5 years. This is in contrast to STL which will have a positive growth at a 5.00% annual rate. This means that the higher growth rate of FCAU 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. These figures suggest that STL ventures generate a higher ROI than that of FCAU.
The value of a stock is ultimately determined by the amount of cash flow that the investors have available. Over the last 12 months, FCAU’s free cash flow per share is a positive 0.
FCAU currently trades at a forward P/E of 5.14, a P/B of 1.28, and a P/S of 0.24 while STL trades at a forward P/E of 11.56, a P/B of 2.41, and a P/S of 8.03. This means that looking at the earnings, book values and sales basis, FCAU 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 FCAU is currently at a -32.77% to its one-year price target of 31.64. Looking at its rival pricing, STL is at a -18.99% relative to its price target of 30.80. This figure implies that over the next one year, STL 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), FCAU is given a 2.00 while 1.70 placed for STL. This means that analysts are more bullish on the outlook for FCAU 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 FCAU is 3.81 while that of STL is just 6.18. This means that analysts are more bullish on the forecast for FCAU stock.
The stock of Sterling Bancorp defeats that of Fiat Chrysler Automobiles N.V. when the two are compared, with STL taking 3 out of the total factors that were been considered. STL 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, STL is the cheaper one on an earnings, book value and sales basis. Finally, the sentiment signal for STL is better on when it is viewed on short interest.