The shares of QUALCOMM Incorporated have decreased by more than -1.89% this year alone. The shares recently went down by -0.35% or -$0.22 and now trades at $62.81. The shares of EnerJex Resources, Inc. (NYSE:ENRJ), has jumped by 4.45% year to date as of 03/12/2018. The shares currently trade at $0.23 and have been able to report a change of 47.78% over the past one week.
The stock of QUALCOMM Incorporated and EnerJex Resources, Inc. were two of the most active stocks on Monday. 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. QCOM has an EBITDA margin of 18.75%, this implies that the underlying business of ENRJ is more profitable. The ROI of QCOM is 3.60% while that of ENRJ is 1856.50%. These figures suggest that ENRJ ventures generate a higher ROI than that of QCOM.
The value of a stock is ultimately determined by the amount of cash flow that the investors have available. Over the last 12 months, QCOM’s free cash flow per share is a positive 3.12.
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 QCOM is 3.40 and that of ENRJ is 0.10. This implies that it is easier for QCOM to cover its immediate obligations over the next 12 months than ENRJ.
QCOM currently trades at a forward P/E of 16.70, a P/B of 3.88, and a P/S of 4.08 while ENRJ trades at a P/S of 1.23. This means that looking at the earnings, book values and sales basis, QCOM 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 QCOM is currently at a -12.08% to its one-year price target of 71.44. This figure implies that over the next one year, ENRJ 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), QCOM is given a 2.40.
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 QCOM is 1.68 while that of ENRJ is just 1.04. This means that analysts are more bullish on the forecast for ENRJ stock.
The stock of QUALCOMM Incorporated defeats that of EnerJex Resources, Inc. when the two are compared, with QCOM taking 5 out of the total factors that were been considered. QCOM 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, QCOM is the cheaper one on an earnings, book value and sales basis. Finally, the sentiment signal for QCOM is better on when it is viewed on short interest.