Earnings

Uncovering the next great stocks: Pandora Media, Inc. (P), Rexahn Pharmaceuticals, Inc. (RNN)

The shares of Pandora Media, Inc. have increased by more than 42.95% this year alone. The shares recently went up by 19.83% or $1.14 and now trades at $6.89. The shares of Rexahn Pharmaceuticals, Inc. (NYSE:RNN), has jumped by 9.41% year to date as of 05/04/2018. The shares currently trade at $2.21 and have been able to report a change of 29.24% over the past one week.

The stock of Pandora Media, Inc. and Rexahn Pharmaceuticals, Inc. were two of the most active stocks on Friday. 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. These figures suggest that RNN ventures generate a higher ROI than that of P.

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 P is 4.00 and that of RNN is 8.70. This implies that it is easier for P to cover its immediate obligations over the next 12 months than RNN. The debt ratio of P is 1.79 compared to 0.00 for RNN. P can be able to settle its long-term debts and thus is a lower financial risk than RNN.

Valuation



P currently trades at a P/B of 11.30, and a P/S of 0.98 while RNN trades at a P/B of 4.09, This means that looking at the earnings, book values and sales basis, P 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 P is currently at a 8.16% to its one-year price target of 6.37. Looking at its rival pricing, RNN is at a -82.77% relative to its price target of 12.83.

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), P is given a 2.60 while 2.00 placed for RNN. This means that analysts are more bullish on the outlook for P 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 P is 7.40 while that of RNN is just 7.70. This means that analysts are more bullish on the forecast for P stock.

Conclusion

The stock of Pandora Media, Inc. defeats that of Rexahn Pharmaceuticals, Inc. when the two are compared, with P taking 4 out of the total factors that were been considered. P 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, P is the cheaper one on an earnings, book value and sales basis. Finally, the sentiment signal for P is better on when it is viewed on short interest.

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