The shares of Flotek Industries, Inc. have increased by more than 26.18% this year alone. The shares recently went up by 6.72% or $0.37 and now trades at $5.88. The shares of Boingo Wireless, Inc. (NASDAQ:WIFI), has slumped by -5.29% year to date as of 01/11/2018. The shares currently trade at $21.31 and have been able to report a change of -7.59% over the past one week.
The stock of Flotek Industries, Inc. and Boingo Wireless, Inc. were two of the most active stocks on Thursday. 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. FTK has an EBITDA margin of 22.01%, this implies that the underlying business of WIFI is more profitable. The ROI of FTK is 1.20% while that of WIFI is -21.50%. These figures suggest that FTK ventures generate a higher ROI than that of WIFI.
The value of a stock is ultimately determined by the amount of cash flow that the investors have available. Over the last 12 months, FTK’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 current ratio for FTK is 2.00 and that of WIFI is 0.50. This implies that it is easier for FTK to cover its immediate obligations over the next 12 months than WIFI. The debt ratio of FTK is 0.15 compared to 0.15 for WIFI. WIFI can be able to settle its long-term debts and thus is a lower financial risk than FTK.
FTK currently trades at a forward P/E of 30.15, a P/B of 1.24, and a P/S of 1.07 while WIFI trades at a P/B of 8.99, and a P/S of 4.55. This means that looking at the earnings, book values and sales basis, FTK 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 FTK is currently at a -2% to its one-year price target of 6.00. Looking at its rival pricing, WIFI is at a -14.45% relative to its price target of 24.91. This figure implies that over the next one year, WIFI 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), FTK is given a 2.00 while 1.90 placed for WIFI. This means that analysts are more bullish on the outlook for FTK 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 FTK is 11.54 while that of WIFI is just 3.82. This means that analysts are more bullish on the forecast for WIFI stock.
The stock of Flotek Industries, Inc. defeats that of Boingo Wireless, Inc. when the two are compared, with FTK taking 6 out of the total factors that were been considered. FTK 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, FTK is the cheaper one on an earnings, book value and sales basis. Finally, the sentiment signal for FTK is better on when it is viewed on short interest.