The shares of The9 Limited have increased by more than 73.41% this year alone. The shares recently went up by 30.62% or $0.26 and now trades at $1.11. The shares of Navistar International Corporation (NYSE:NAV), has jumped by 7.35% year to date as of 01/11/2018. The shares currently trade at $46.03 and have been able to report a change of 3.51% over the past one week.
The stock of The9 Limited and Navistar International Corporation 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. These figures suggest that NAV ventures generate a higher ROI than that of NCTY.
The value of a stock is ultimately determined by the amount of cash flow that the investors have available. Over the last 12 months, NCTY’s free cash flow per share is a positive 0, while that of NAV is positive 2.63.
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 NCTY is 0.10 and that of NAV is 1.10. This implies that it is easier for NCTY to cover its immediate obligations over the next 12 months than NAV.
NCTY currently trades at a P/S of 7.94 while NAV trades at a forward P/E of 15.77, and a P/S of 0.54. This means that looking at the earnings, book values and sales basis, NCTY 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 NCTY is currently at a -68.29% to its one-year price target of 3.50. Looking at its rival pricing, NAV is at a 3.44% relative to its price target of 44.50. This figure implies that over the next one year, NAV 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), NCTY is given a 4.00 while 2.70 placed for NAV. This means that analysts are more bullish on the outlook for NCTY 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 NCTY is 0.72 while that of NAV is just 7.52. This means that analysts are more bullish on the forecast for NCTY stock.
The stock of The9 Limited defeats that of Navistar International Corporation when the two are compared, with NCTY taking 4 out of the total factors that were been considered. NCTY 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, NCTY is the cheaper one on an earnings, book value and sales basis. Finally, the sentiment signal for NCTY is better on when it is viewed on short interest.