Earnings

Financially Devastating or Fantastic? – PDL BioPharma, Inc. (PDLI), Tanger Factory Outlet Centers, Inc. (SKT)

The shares of PDL BioPharma, Inc. have decreased by more than -1.46% this year alone. The shares recently went down by -2.53% or -$0.07 and now trades at $2.70. The shares of Tanger Factory Outlet Centers, Inc. (NYSE:SKT), has slumped by -15.73% year to date as of 06/13/2018. The shares currently trade at $22.34 and have been able to report a change of 0.63% over the past one week.

The stock of PDL BioPharma, Inc. and Tanger Factory Outlet Centers, 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.

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. PDLI has an EBITDA margin of 73.77%, this implies that the underlying business of PDLI is more profitable. The ROI of PDLI is 11.90% while that of SKT is 5.30%. These figures suggest that PDLI ventures generate a higher ROI than that of SKT.

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, PDLI’s free cash flow per share is a positive -0.

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 debt ratio of PDLI is 0.14 compared to 3.14 for SKT. SKT can be able to settle its long-term debts and thus is a lower financial risk than PDLI.

Valuation

PDLI currently trades at a forward P/E of 15.43, a P/B of 0.48, and a P/S of 1.31 while SKT trades at a forward P/E of 22.66, a P/B of 3.71, and a P/S of 4.26. This means that looking at the earnings, book values and sales basis, PDLI 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 PDLI is currently at a -10% to its one-year price target of 3.00.

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 PDLI is 12.06 while that of SKT is just 16.48. This means that analysts are more bullish on the forecast for PDLI stock.

Conclusion

The stock of Tanger Factory Outlet Centers, Inc. defeats that of PDL BioPharma, Inc. when the two are compared, with SKT taking 2 out of the total factors that were been considered. SKT 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, SKT is the cheaper one on an earnings, book value and sales basis. Finally, the sentiment signal for SKT is better on when it is viewed on short interest.

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