The shares of Community Health Systems, Inc. have increased by more than 16.67% this year alone. The shares recently went up by 23.63% or $0.95 and now trades at $4.97. The shares of Zillow Group, Inc. (NASDAQ:Z), has jumped by 8.82% year to date as of 01/11/2018. The shares currently trade at $44.53 and have been able to report a change of 5.70% over the past one week.
The stock of Community Health Systems, Inc. and Zillow 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. CYH has an EBITDA margin of 8.99%, this implies that the underlying business of CYH is more profitable. These figures suggest that Z ventures generate a higher ROI than that of CYH.
The value of a stock is ultimately determined by the amount of cash flow that the investors have available. Over the last 12 months, CYH’s free cash flow per share is a negative -0.22, while that of Z is positive 0.01.
CYH currently trades at a P/B of 0.46, and a P/S of 0.04 while Z trades at a forward P/E of 46.87, a P/B of 3.11, and a P/S of 5.36. This means that looking at the earnings, book values and sales basis, CYH 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 CYH is currently at a 3.76% to its one-year price target of 4.79. Looking at its rival pricing, Z is at a 1.97% relative to its price target of 43.67. This figure implies that over the next one year, Z 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), CYH is given a 3.30 while 2.50 placed for Z. This means that analysts are more bullish on the outlook for CYH 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 CYH is 9.57 while that of Z is just 21.95. This means that analysts are more bullish on the forecast for CYH stock.
The stock of Community Health Systems, Inc. defeats that of Zillow Group, Inc. when the two are compared, with CYH taking 7 out of the total factors that were been considered. CYH 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, CYH is the cheaper one on an earnings, book value and sales basis. Finally, the sentiment signal for CYH is better on when it is viewed on short interest.