The shares of Polaris Industries Inc. have increased by more than 1.90% this year alone. The shares recently went down by -1.04% or -$1.33 and now trades at $126.34. The shares of Cboe Global Markets, Inc. (NASDAQ:CBOE), has slumped by -16.12% year to date as of 06/13/2018. The shares currently trade at $104.50 and have been able to report a change of 4.17% over the past one week.
The stock of Polaris Industries Inc. and Cboe Global Markets, Inc. 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: 18.00% versus 15.60%
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 PII will grow it’s earning at a 18.00% annual rate in the next 5 years. This is in contrast to CBOE which will have a positive growth at a 15.60% annual rate. This means that the higher growth rate of PII 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. PII has an EBITDA margin of 11.21%, this implies that the underlying business of CBOE is more profitable. The ROI of PII is 14.60% while that of CBOE is 5.70%. These figures suggest that PII ventures generate a higher ROI than that of CBOE.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, PII’s free cash flow per share is a negative -1.72, while that of CBOE is positive 5.6.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 PII is 1.20 and that of CBOE is 1.30. This implies that it is easier for PII to cover its immediate obligations over the next 12 months than CBOE. The debt ratio of PII is 1.06 compared to 0.38 for CBOE. PII can be able to settle its long-term debts and thus is a lower financial risk than CBOE.Valuation
PII currently trades at a forward P/E of 18.18, a P/B of 8.21, and a P/S of 1.43 while CBOE trades at a forward P/E of 21.21, a P/B of 3.70, and a P/S of 4.43. This means that looking at the earnings, book values and sales basis, PII 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 PII is currently at a 1.89% to its one-year price target of 124.00. Looking at its rival pricing, CBOE is at a -7.32% relative to its price target of 112.75.
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), PII is given a 2.70 while 2.70 placed for CBOE. This means that analysts are equally bullish on their outlook for the two stocks 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 PII is 9.57 while that of CBOE is just 3.39. This means that analysts are more bullish on the forecast for CBOE stock.
The stock of Polaris Industries Inc. defeats that of Cboe Global Markets, Inc. when the two are compared, with PII taking 4 out of the total factors that were been considered. PII 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, PII is the cheaper one on an earnings, book value and sales basis. Finally, the sentiment signal for PII is better on when it is viewed on short interest.