The shares of GNC Holdings, Inc. have increased by more than 0.81% this year alone. The shares recently went up by 4.49% or $0.16 and now trades at $3.72. The shares of The Brink’s Company (NYSE:BCO), has jumped by 10.42% year to date as of 01/11/2018. The shares currently trade at $86.90 and have been able to report a change of 9.45% over the past one week.
The stock of GNC Holdings, Inc. and The Brink’s Company 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 GNC is -16.90% while that of BCO is 8.10%. These figures suggest that BCO ventures generate a higher ROI than that of GNC.
The value of a stock is ultimately determined by the amount of cash flow that the investors have available. Over the last 12 months, GNC’s free cash flow per share is a positive 2.8, while that of BCO is negative -1.25.
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 GNC is 2.40 and that of BCO is 1.20. This implies that it is easier for GNC to cover its immediate obligations over the next 12 months than BCO.
GNC currently trades at a forward P/E of 3.36, and a P/S of 0.10 while BCO trades at a forward P/E of 23.68, a P/B of 9.61, and a P/S of 1.34. This means that looking at the earnings, book values and sales basis, GNC 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 GNC is currently at a -40.48% to its one-year price target of 6.25. Looking at its rival pricing, BCO is at a -8.04% relative to its price target of 94.50. This figure implies that over the next one year, BCO 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), GNC is given a 3.30 while 2.40 placed for BCO. This means that analysts are more bullish on the outlook for GNC 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 GNC is 8.28 while that of BCO is just 2.63. This means that analysts are more bullish on the forecast for BCO stock.
The stock of The Brink’s Company defeats that of GNC Holdings, Inc. when the two are compared, with BCO taking 5 out of the total factors that were been considered. BCO 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, BCO is the cheaper one on an earnings, book value and sales basis. Finally, the sentiment signal for BCO is better on when it is viewed on short interest.