The shares of Boardwalk Pipeline Partners, LP have increased by more than 5.81% this year alone. The shares recently went up by 4.51% or $0.59 and now trades at $13.66. The shares of Ritter Pharmaceuticals, Inc. (NASDAQ:RTTR), has jumped by 6.22% year to date as of 01/11/2018. The shares currently trade at $0.35 and have been able to report a change of 7.83% over the past one week.
The stock of Boardwalk Pipeline Partners, LP and Ritter Pharmaceuticals, 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. BWP has an EBITDA margin of 67.8%, this implies that the underlying business of BWP is more profitable. These figures suggest that BWP ventures generate a higher ROI than that of RTTR.
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 BWP is 0.60 and that of RTTR is 1.30. This implies that it is easier for BWP to cover its immediate obligations over the next 12 months than RTTR. The debt ratio of BWP is 0.78 compared to 0.00 for RTTR. BWP can be able to settle its long-term debts and thus is a lower financial risk than RTTR.
BWP currently trades at a forward P/E of 10.44, a P/B of 0.75, and a P/S of 2.60 while RTTR trades at a P/B of 4.37, This means that looking at the earnings, book values and sales basis, BWP 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 BWP is currently at a -22.82% to its one-year price target of 17.70. Looking at its rival pricing, RTTR is at a -88.96% relative to its price target of 3.17. This figure implies that over the next one year, RTTR 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), BWP is given a 2.60 while 2.00 placed for RTTR. This means that analysts are more bullish on the outlook for BWP 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 BWP is 7.04 while that of RTTR is just 1.55. This means that analysts are more bullish on the forecast for RTTR stock.
The stock of Boardwalk Pipeline Partners, LP defeats that of Ritter Pharmaceuticals, Inc. when the two are compared, with BWP taking 4 out of the total factors that were been considered. BWP 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, BWP is the cheaper one on an earnings, book value and sales basis. Finally, the sentiment signal for BWP is better on when it is viewed on short interest.