The shares of Valeant Pharmaceuticals International, Inc. have increased by more than 3.75% this year alone. The shares recently went up by 3.60% or $0.75 and now trades at $21.56. The shares of Microbot Medical Inc. (NASDAQ:MBOT), has slumped by -14.22% year to date as of 05/15/2018. The shares currently trade at $0.88 and have been able to report a change of 3.09% over the past one week.
The stock of Valeant Pharmaceuticals International, Inc. and Microbot Medical Inc. were two of the most active stocks on Tueday. 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. VRX has an EBITDA margin of 8.63%, this implies that the underlying business of VRX is more profitable. These figures suggest that VRX ventures generate a higher ROI than that of MBOT.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 VRX is 1.20 and that of MBOT is 20.70. This implies that it is easier for VRX to cover its immediate obligations over the next 12 months than MBOT. The debt ratio of VRX is 5.89 compared to 0.00 for MBOT. VRX can be able to settle its long-term debts and thus is a lower financial risk than MBOT.Valuation
VRX currently trades at a forward P/E of 6.15, a P/B of 1.71, and a P/S of 0.88 while MBOT trades at a P/B of 3.24, This means that looking at the earnings, book values and sales basis, VRX 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 VRX is currently at a 25.79% to its one-year price target of 17.14. Looking at its rival pricing, MBOT is at a -49.71% relative to its price target of 1.75.
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), VRX is given a 3.00 while 1.00 placed for MBOT. This means that analysts are more bullish on the outlook for VRX 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 VRX is 2.17 while that of MBOT is just 7.62. This means that analysts are more bullish on the forecast for VRX stock.
The stock of Valeant Pharmaceuticals International, Inc. defeats that of Microbot Medical Inc. when the two are compared, with VRX taking 6 out of the total factors that were been considered. VRX 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, VRX is the cheaper one on an earnings, book value and sales basis. Finally, the sentiment signal for VRX is better on when it is viewed on short interest.