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Comparing Top Moving Stocks J. C. Penney Company, Inc. (JCP), Walter Investment Management Corp. (WAC)

The shares of J. C. Penney Company, Inc. have decreased by more than -65.46% this year alone. The shares recently went down by -10.31% or -$0.33 and now trades at $2.87. The shares of Walter Investment Management Corp. (NYSE:WAC), has slumped by -87.16% year to date as of 12/11/2017. The shares currently trade at $0.61 and have been able to report a change of 32.44% over the past one week.

The stock of J. C. Penney Company, Inc. and Walter Investment Management Corp. 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 the EBITDA margin and Return on Investment (ROI), which balances the difference in capital structure. JCP has an EBITDA margin of 5.73%, this implies that the underlying business of WAC is more profitable. The ROI of JCP is 5.90% while that of WAC is -19.40%. These figures suggest that JCP ventures generate a higher ROI than that of WAC.



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, JCP’s free cash flow per share is a negative -2.66, while that of WAC is positive 6.86.

Valuation




JCP currently trades at a forward P/E of 18.16, a P/B of 0.83, and a P/S of 0.07 while WAC trades at a P/S of 0.02. This means that looking at the earnings, book values and sales basis, JCP 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 JCP is currently at a -20.5% to its one-year price target of 3.61. This figure implies that over the next one year, WAC 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), JCP is given a 3.00 while 4.00 placed for WAC. This means that analysts are more bullish on the outlook for WAC 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 JCP is 8.95 while that of WAC is just 2.50. This means that analysts are more bullish on the forecast for WAC stock.

Conclusion

The stock of J. C. Penney Company, Inc. defeats that of Walter Investment Management Corp. when the two are compared, with JCP taking 3 out of the total factors that were been considered. JCP 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, JCP is the cheaper one on an earnings, book value and sales basis. Finally, the sentiment signal for JCP is better on when it is viewed on short interest.

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