Earnings

Which is more compelling pick right now? – Boston Scientific Corporation (BSX), Platform Specialty Products Corporation (PAH)

The shares of Boston Scientific Corporation have increased by more than 20.90% this year alone. The shares recently went up by 1.18% or $0.35 and now trades at $29.97. The shares of Platform Specialty Products Corporation (NYSE:PAH), has jumped by 12.40% year to date as of 05/16/2018. The shares currently trade at $11.15 and have been able to report a change of 5.49% over the past one week.

The stock of Boston Scientific Corporation and Platform Specialty Products Corporation were two of the most active stocks on Wednesday. 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: 10.48% versus 15.67%

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 BSX will grow it’s earning at a 10.48% annual rate in the next 5 years. This is in contrast to PAH which will have a positive growth at a 15.67% annual rate. This means that the higher growth rate of PAH 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. BSX has an EBITDA margin of 21.88%, this implies that the underlying business of BSX is more profitable. The ROI of BSX is 10.40% while that of PAH is 2.00%. These figures suggest that BSX ventures generate a higher ROI than that of PAH.

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, BSX’s free cash flow per share is a positive 1.52, while that of PAH is negative -4.42.

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 BSX is 0.80 and that of PAH is 2.10. This implies that it is easier for BSX to cover its immediate obligations over the next 12 months than PAH. The debt ratio of BSX is 0.82 compared to 1.96 for PAH. PAH can be able to settle its long-term debts and thus is a lower financial risk than BSX.

Valuation

BSX currently trades at a forward P/E of 19.14, a P/B of 5.86, and a P/S of 4.45 while PAH trades at a forward P/E of 9.98, a P/B of 1.12, and a P/S of 0.80. This means that looking at the earnings, book values and sales basis, PAH 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 BSX is currently at a -8.4% to its one-year price target of 32.72. Looking at its rival pricing, PAH is at a -22.35% relative to its price target of 14.36.

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), BSX is given a 1.70 while 2.20 placed for PAH. This means that analysts are more bullish on the outlook for PAH 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 BSX is 2.27 while that of PAH is just 8.66. This means that analysts are more bullish on the forecast for BSX stock.

Conclusion

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

Previous ArticleNext Article

Related Post

Should You Buy Rite Aid Corporation (RAD) or Walgr... Rite Aid Corporation (NYSE:RAD) shares are down more than -77.06% this year and recently decreased -3.57% or -$0.07 to settle at $1.89. Walgreens Boot...
Comparing Adamas Pharmaceuticals, Inc. (ADMS) and ... Adamas Pharmaceuticals, Inc. (NASDAQ:ADMS) shares are up more than 103.02% this year and recently decreased -1.52% or -$0.52 to settle at $33.79. Mome...
Critical Comparison: Exact Sciences Corporation (E... Exact Sciences Corporation (NASDAQ:EXAS) shares are up more than 0.02% this year and recently decreased -1.20% or -$0.64 to settle at $52.55. Realogy ...
Choosing Between Hot Stocks: Splunk Inc. (SPLK), P... The shares of Splunk Inc. have increased by more than 29.86% this year alone. The shares recently went up by 3.58% or $3.72 and now trades at $107.58....
MGIC Investment Corporation (MTG) vs. MBIA Inc. (M... MGIC Investment Corporation (NYSE:MTG) shares are up more than 50.64% this year and recently increased 2.47% or $0.37 to settle at $15.35. MBIA Inc. (...