The shares of Prologis, Inc. have increased by more than 1.09% this year alone. The shares recently went down by -0.18% or -$0.12 and now trades at $65.21. The shares of PG&E Corporation (NYSE:PCG), has slumped by -3.57% year to date as of 05/14/2018. The shares currently trade at $43.23 and have been able to report a change of -3.12% over the past one week.
The stock of Prologis, Inc. and PG&E Corporation 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: -6.05% versus 3.63%
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 PLD will grow it’s earning at a -6.05% annual rate in the next 5 years. This is in contrast to PCG which will have a positive growth at a 3.63% annual rate. This means that the higher growth rate of PCG 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. PLD has an EBITDA margin of 115.84%, this implies that the underlying business of PLD is more profitable. The ROI of PLD is 2.60% while that of PCG is 6.80%. These figures suggest that PCG ventures generate a higher ROI than that of PLD.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, PLD’s free cash flow per share is a positive 2.04, while that of PCG is positive 0.24.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 debt ratio of PLD is 0.61 compared to 0.95 for PCG. PCG can be able to settle its long-term debts and thus is a lower financial risk than PLD.Valuation
PLD currently trades at a forward P/E of 35.40, a P/B of 2.22, and a P/S of 12.94 while PCG trades at a forward P/E of 10.76, a P/B of 1.13, and a P/S of 1.30. This means that looking at the earnings, book values and sales basis, PCG 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 PLD is currently at a -7.77% to its one-year price target of 70.70. Looking at its rival pricing, PCG is at a -12.15% relative to its price target of 49.21.
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), PLD is given a 1.80 while 2.90 placed for PCG. This means that analysts are more bullish on the outlook for PCG 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 PLD is 2.82 while that of PCG is just 1.82. This means that analysts are more bullish on the forecast for PCG stock.
The stock of Prologis, Inc. defeats that of PG&E Corporation when the two are compared, with PLD taking 5 out of the total factors that were been considered. PLD 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, PLD is the cheaper one on an earnings, book value and sales basis. Finally, the sentiment signal for PLD is better on when it is viewed on short interest.