The shares of ICICI Bank Limited have increased by more than 41.28% this year alone. The shares recently went down by -2.73% or -$0.27 and now trades at $9.62. The shares of Scientific Games Corporation (NASDAQ:SGMS), has jumped by 275.00% year to date as of 11/20/2017. The shares currently trade at $52.50 and have been able to report a change of 11.46% over the past one week.
The stock of ICICI Bank Limited and Scientific Games Corporation were two of the most active stocks on Monday. 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 Return on Investment (ROI), which balances the difference in capital structure. The ROI of IBN is 2.70% while that of SGMS is 4.60%. These figures suggest that SGMS ventures generate a higher ROI than that of IBN.
The value of a stock is ultimately determined by the amount of cash flow that the investors have available. Over the last 12 months, IBN’s free cash flow per share is a positive 0, while that of SGMS is positive 1.27.
IBN currently trades at a forward P/E of 14.80, a P/B of 1.90, and a P/S of 6.62 while SGMS trades at a forward P/S of 1.55. This means that looking at the earnings, book values and sales basis, IBN 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 IBN is currently at a -15.61% to its one-year price target of 11.40. Looking at its rival pricing, SGMS is at a 14.13% relative to its price target of 46.00. This figure implies that over the next one year, SGMS is a better investment.
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), IBN is given a 1.00 while 2.30 placed for SGMS. This means that analysts are more bullish on the outlook for SGMS 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 IBN is 0.52 while that of SGMS is just 9.26. This means that analysts are more bullish on the forecast for IBN stock.
The stock of ICICI Bank Limited defeats that of Scientific Games Corporation when the two are compared, with IBN taking 5 out of the total factors that were been considered. IBN 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, IBN is the cheaper one on an earnings, book value and sales basis. Finally, the sentiment signal for IBN is better on when it is viewed on short interest.