The shares of American Lorain Corporation have increased by more than 30.00% this year alone. The shares recently went up by 15.32% or $0.03 and now trades at $0.23. The shares of The Meet Group, Inc. (NASDAQ:MEET), has jumped by 2.84% year to date as of 01/11/2018. The shares currently trade at $2.90 and have been able to report a change of -0.68% over the past one week.
The stock of American Lorain Corporation and The Meet Group, 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. The ROI of ALN is -34.40% while that of MEET is 23.70%. These figures suggest that MEET ventures generate a higher ROI than that of ALN.
The value of a stock is ultimately determined by the amount of cash flow that the investors have available. Over the last 12 months, ALN’s free cash flow per share is a positive 0, while that of MEET is positive 0.01.
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 ALN is 0.60 and that of MEET is 2.50. This implies that it is easier for ALN to cover its immediate obligations over the next 12 months than MEET. The debt ratio of ALN is 1.06 compared to 0.00 for MEET. ALN can be able to settle its long-term debts and thus is a lower financial risk than MEET.
ALN currently trades at a P/B of 0.17, and a P/S of 0.68 while MEET trades at a forward P/E of 7.99, a P/B of 0.83, and a P/S of 1.85. This means that looking at the earnings, book values and sales basis, ALN 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. Looking at its rival pricing, MEET is at a -35.56% relative to its price target of 4.50. This figure implies that over the next one year, MEET is a better investment.
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 ALN is 0.06 while that of MEET is just 4.74. This means that analysts are more bullish on the forecast for ALN stock.
The stock of American Lorain Corporation defeats that of The Meet Group, Inc. when the two are compared, with ALN taking 6 out of the total factors that were been considered. ALN 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, ALN is the cheaper one on an earnings, book value and sales basis. Finally, the sentiment signal for ALN is better on when it is viewed on short interest.