Earnings

A Comparison of Top Movers: Exelon Corporation (EXC), Tapestry, Inc. (TPR)

The shares of Exelon Corporation have increased by more than 2.36% this year alone. The shares recently went down by -0.74% or -$0.3 and now trades at $40.34. The shares of Tapestry, Inc. (NYSE:TPR), has jumped by 3.32% year to date as of 05/14/2018. The shares currently trade at $45.70 and have been able to report a change of 0.64% over the past one week.

The stock of Exelon Corporation and Tapestry, 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.

Next 5Y EPS Growth: 4.72% versus 11.51%

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 EXC will grow it’s earning at a 4.72% annual rate in the next 5 years. This is in contrast to TPR which will have a positive growth at a 11.51% annual rate. This means that the higher growth rate of TPR 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. EXC has an EBITDA margin of 30.36%, this implies that the underlying business of EXC is more profitable. The ROI of EXC is 6.30% while that of TPR is 13.50%. These figures suggest that TPR ventures generate a higher ROI than that of EXC.

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, EXC’s free cash flow per share is a negative -2.1.

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 EXC is 1.10 and that of TPR is 2.70. This implies that it is easier for EXC to cover its immediate obligations over the next 12 months than TPR. The debt ratio of EXC is 1.20 compared to 0.51 for TPR. EXC can be able to settle its long-term debts and thus is a lower financial risk than TPR.

Valuation

EXC currently trades at a forward P/E of 13.19, a P/B of 1.29, and a P/S of 1.13 while TPR trades at a forward P/E of 15.96, a P/B of 4.17, and a P/S of 2.37. This means that looking at the earnings, book values and sales basis, EXC 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 EXC is currently at a -5.48% to its one-year price target of 42.68. Looking at its rival pricing, TPR is at a -18.68% relative to its price target of 56.20.

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), EXC is given a 1.90 while 2.20 placed for TPR. This means that analysts are more bullish on the outlook for TPR 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 EXC is 3.51 while that of TPR is just 2.68. This means that analysts are more bullish on the forecast for TPR stock.

Conclusion

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

Previous ArticleNext Article

Related Post

Chico’s FAS, Inc. (CHS) vs. American Eagle O... Chico's FAS, Inc. (NYSE:CHS) shares are down more than -46.49% this year and recently increased 3.77% or $0.28 to settle at $7.70. American Eagle Outf...
Pareteum Corporation (TEUM) vs. Cincinnati Bell In... Pareteum Corporation (NYSE:TEUM) shares are down more than -8.70% this year and recently decreased -11.27% or -$0.24 to settle at $1.89. Cincinnati Be...
A Side-by-side Analysis of Zynga Inc. (ZNGA) and D... Zynga Inc. (NASDAQ:ZNGA) shares are down more than -4.50% this year and recently decreased -1.04% or -$0.04 to settle at $3.82. Dynegy Inc. (NYSE:DYN)...
United States Steel Corporation (X) Forming A Patt... United States Steel Corporation (NYSE:X) is on our radar right now but there could still be some opportunities on the horizon. Now trading with a mark...
BioMarin Pharmaceutical Inc. (BMRN) vs. Incyte Cor... BioMarin Pharmaceutical Inc. (NASDAQ:BMRN) shares are up more than 3.88% this year and recently increased 2.66% or $2.4 to settle at $92.63. Incyte Co...