The shares of The Progressive Corporation have increased by more than 11.13% this year alone. The shares recently went down by -0.64% or -$0.4 and now trades at $62.59. The shares of Masco Corporation (NYSE:MAS), has slumped by -12.65% year to date as of 06/06/2018. The shares currently trade at $38.38 and have been able to report a change of 0.58% over the past one week.
The stock of The Progressive Corporation and Masco 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: 19.76% versus 19.09%
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 PGR will grow it’s earning at a 19.76% annual rate in the next 5 years. This is in contrast to MAS which will have a positive growth at a 19.09% annual rate. This means that the higher growth rate of PGR 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. PGR has an EBITDA margin of 10.02%, this implies that the underlying business of MAS is more profitable. The ROI of PGR is 13.10% while that of MAS is 27.40%. These figures suggest that MAS ventures generate a higher ROI than that of PGR.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, PGR’s free cash flow per share is a positive 3.91, while that of MAS is negative -1.67.Valuation
PGR currently trades at a forward P/E of 15.32, a P/B of 3.71, and a P/S of 1.30 while MAS trades at a forward P/E of 13.28, and a P/S of 1.53. This means that looking at the earnings, book values and sales basis, PGR 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 PGR is currently at a -3.51% to its one-year price target of 64.87. Looking at its rival pricing, MAS is at a -16.37% relative to its price target of 45.89.
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), PGR is given a 2.40 while 2.10 placed for MAS. This means that analysts are more bullish on the outlook for PGR 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 PGR is 2.83 while that of MAS is just 2.30. This means that analysts are more bullish on the forecast for MAS stock.
The stock of The Progressive Corporation defeats that of Masco Corporation when the two are compared, with PGR taking 5 out of the total factors that were been considered. PGR 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, PGR is the cheaper one on an earnings, book value and sales basis. Finally, the sentiment signal for PGR is better on when it is viewed on short interest.