Finance

The Meet Group, Inc. (MEET) vs. Micro Focus International plc (MFGP): Which is the Better Investment?

The Meet Group, Inc. (NASDAQ:MEET) shares are up more than 15.96% this year and recently increased 5.83% or $0.18 to settle at $3.27. Micro Focus International plc (NYSE:MFGP), on the other hand, is down -46.23% year to date as of 05/16/2018. It currently trades at $18.06 and has returned 4.63% during the past week.

The Meet Group, Inc. (NASDAQ:MEET) and Micro Focus International plc (NYSE:MFGP) are the two most active stocks in the Internet Information Providers industry based on today’s trading volumes. Investor interest in the two stocks is clearly very high, but which is the better investment? To answer this question, we will compare the two companies across growth, profitability, risk, and valuation metrics, and also examine their analyst ratings and insider activity trends.

Growth

The ability to consistently grow earnings at a high compound rate is a defining characteristic of the best companies for long-term investment. Analysts expect MEET to grow earnings at a 20.00% annual rate over the next 5 years.

Cash Flow

If there’s one thing investors care more about than earnings, it’s cash flow. MEET’s free cash flow (“FCF”) per share for the trailing twelve months was +0.10. Comparatively, MFGP’s free cash flow per share was -.

Valuation

MEET trades at a forward P/E of 10.55, a P/B of 1.28, and a P/S of 1.73, compared to a P/B of 1.03, and a P/S of 1.99 for MFGP. MEET is the cheaper of the two stocks on sales basis but is expensive in terms of P/E and P/B ratio. Given that earnings are what matter most to investors, analysts tend to place a greater weight on the P/E.

Analyst Price Targets and Opinions

Investors often compare a stock’s current price to an analyst price target to get a sense of the potential upside within the next year. MEET is currently priced at a -4.39% to its one-year price target of 3.42.

Insider Activity and Investor Sentiment



Comparing the number of shares sold short to the float is a method analysts often use to get a reading on investor sentiment. MEET has a short ratio of 5.74 compared to a short interest of 0.46 for MFGP. This implies that the market is currently less bearish on the outlook for MFGP.

Summary

Micro Focus International plc (NYSE:MFGP) beats The Meet Group, Inc. (NASDAQ:MEET) on a total of 7 of the 12 factors compared between the two stocks. MFGP is growing fastly and has lower financial risk. In terms of valuation, MFGP is the cheaper of the two stocks on an earnings and book value, Finally, MFGP has better sentiment signals based on short interest.

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