Earnings

Which Market Offer More Value? – GNC Holdings, Inc. (GNC), Delek US Holdings, Inc. (DK)

The shares of GNC Holdings, Inc. have increased by more than 1.63% this year alone. The shares recently went up by 3.31% or $0.12 and now trades at $3.75. The shares of Delek US Holdings, Inc. (NYSE:DK), has jumped by 30.85% year to date as of 04/16/2018. The shares currently trade at $45.72 and have been able to report a change of 8.70% over the past one week.

The stock of GNC Holdings, Inc. and Delek US Holdings, 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. The ROI of GNC is -15.50% while that of DK is 1.60%. These figures suggest that DK ventures generate a higher ROI than that of GNC.

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, GNC’s free cash flow per share is a positive 3.17, while that of DK is positive 2.41.

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 GNC is 2.80 and that of DK is 1.00. This implies that it is easier for GNC to cover its immediate obligations over the next 12 months than DK.

Valuation

GNC currently trades at a forward P/E of 4.42, and a P/S of 0.13 while DK trades at a forward P/E of 14.66, a P/B of 2.26, and a P/S of 0.51. This means that looking at the earnings, book values and sales basis, GNC 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 GNC is currently at a 3.31% to its one-year price target of 3.63. Looking at its rival pricing, DK is at a 0.48% relative to its price target of 45.50.




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), GNC is given a 3.60 while 1.70 placed for DK. This means that analysts are more bullish on the outlook for GNC 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 GNC is 6.12 while that of DK is just 5.17. This means that analysts are more bullish on the forecast for DK stock.

Conclusion

The stock of Delek US Holdings, Inc. defeats that of GNC Holdings, Inc. when the two are compared, with DK taking 6 out of the total factors that were been considered. DK 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, DK is the cheaper one on an earnings, book value and sales basis. Finally, the sentiment signal for DK is better on when it is viewed on short interest.

Previous ArticleNext Article

Related Post

Should You Buy VEREIT, Inc. (VER) or Colgate-Palmo... VEREIT, Inc. (NYSE:VER) shares are down more than -12.20% this year and recently decreased -1.44% or -$0.1 to settle at $6.84. Colgate-Palmolive Compa...
Understanding Technical Signals From Advaxis, Inc.... Advaxis, Inc. (NASDAQ:ADXS) fell by -19.88% in Tuesday’s trading session from $6.84 to $5.48 and has now fallen 3 consecutive sessions. The stock pric...
Juno Therapeutics, Inc. (JUNO) Technical Analysis ... Juno Therapeutics, Inc. (NASDAQ:JUNO) fell by -7.94% in Thursday’s trading day from $45.21 to $41.62. The price has been moving in both directions for...
Should You Buy Johnson & Johnson (JNJ) or CA,... Johnson & Johnson (NYSE:JNJ) shares are down more than -5.07% this year and recently decreased -0.87% or -$1.17 to settle at $132.63. CA, Inc. (NA...
Critical Comparison: Dave & Buster’s En... Dave & Buster's Entertainment, Inc. (NASDAQ:PLAY) shares are down more than -1.28% this year and recently increased 0.05% or $0.03 to settle at $5...