The shares of TimkenSteel Corporation have decreased by more than -17.12% this year alone. The shares recently went down by -13.95% or -$2.08 and now trades at $12.83. The shares of Zynerba Pharmaceuticals, Inc. (NASDAQ:ZYNE), has slumped by -25.85% year to date as of 12/05/2017. The shares currently trade at $11.56 and have been able to report a change of -15.99% over the past one week.
The stock of TimkenSteel Corporation and Zynerba Pharmaceuticals, Inc. were two of the most active stocks on Tueday. 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. TMST has an EBITDA margin of 0.77%, this implies that the underlying business of TMST is more profitable. These figures suggest that ZYNE ventures generate a higher ROI than that of TMST.
The value of a stock is ultimately determined by the amount of cash flow that the investors have available. Over the last 12 months, TMST’s free cash flow per share is a positive -0, while that of ZYNE is negative -39.19.
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 TMST is 2.20 and that of ZYNE is 8.60. This implies that it is easier for TMST to cover its immediate obligations over the next 12 months than ZYNE. The debt ratio of TMST is 0.28 compared to 0.00 for ZYNE. TMST can be able to settle its long-term debts and thus is a lower financial risk than ZYNE.
TMST currently trades at a forward P/E of 14.01, a P/B of 0.96, and a P/S of 0.47 while ZYNE trades at a P/B of 2.34, This means that looking at the earnings, book values and sales basis, TMST 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 TMST is currently at a -34.77% to its one-year price target of 19.67. Looking at its rival pricing, ZYNE is at a -6.24% relative to its price target of 12.33. This figure implies that over the next one year, ZYNE 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), TMST is given a 2.60 while 2.30 placed for ZYNE. This means that analysts are more bullish on the outlook for TMST 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 TMST is 14.04 while that of ZYNE is just 3.57. This means that analysts are more bullish on the forecast for ZYNE stock.
The stock of TimkenSteel Corporation defeats that of Zynerba Pharmaceuticals, Inc. when the two are compared, with TMST taking 5 out of the total factors that were been considered. TMST 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, TMST is the cheaper one on an earnings, book value and sales basis. Finally, the sentiment signal for TMST is better on when it is viewed on short interest.