The shares of iRobot Corporation have increased by more than 0.91% this year alone. The shares recently went down by -2.21% or -$1.75 and now trades at $77.40. The shares of Simon Property Group, Inc. (NYSE:SPG), has slumped by -5.38% year to date as of 06/13/2018. The shares currently trade at $162.50 and have been able to report a change of -1.68% over the past one week.
The stock of iRobot Corporation and Simon Property Group, 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 8.60%
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 IRBT will grow it’s earning at a 18.00% annual rate in the next 5 years. This is in contrast to SPG which will have a positive growth at a 8.60% annual rate. This means that the higher growth rate of IRBT 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. IRBT has an EBITDA margin of 17.73%, this implies that the underlying business of SPG is more profitable. The ROI of IRBT is 12.60% while that of SPG is 9.50%. These figures suggest that IRBT ventures generate a higher ROI than that of SPG.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, IRBT’s free cash flow per share is a positive 0, while that of SPG is positive 0.81.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 IRBT is 0.00 compared to 6.83 for SPG. SPG can be able to settle its long-term debts and thus is a lower financial risk than IRBT.Valuation
IRBT currently trades at a forward P/E of 25.49, a P/B of 4.36, and a P/S of 2.27 while SPG trades at a forward P/E of 22.15, a P/B of 16.77, and a P/S of 8.99. This means that looking at the earnings, book values and sales basis, IRBT 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 IRBT is currently at a 2.61% to its one-year price target of 75.43. Looking at its rival pricing, SPG is at a -12.07% relative to its price target of 184.81.
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), IRBT is given a 2.40 while 2.00 placed for SPG. This means that analysts are more bullish on the outlook for IRBT 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 IRBT is 13.39 while that of SPG is just 8.81. This means that analysts are more bullish on the forecast for SPG stock.
The stock of iRobot Corporation defeats that of Simon Property Group, Inc. when the two are compared, with IRBT taking 7 out of the total factors that were been considered. IRBT 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, IRBT is the cheaper one on an earnings, book value and sales basis. Finally, the sentiment signal for IRBT is better on when it is viewed on short interest.