Evolent Health, Inc. (NYSE:EVH), on the other hand, is up 16.26% year to date as of 01/16/2018. It currently trades at $14.30 and has returned 11.28% during the past week.
Rennova Health, Inc. (NASDAQ:RNVA) and Evolent Health, Inc. (NYSE:EVH) are the two most active stocks in the Healthcare Information Services industry based on today’s trading volumes. Investor interest in the two stocks is clearly very high, but which is the better investment? To answer this question, we will compare the two companies across growth, profitability, risk, and valuation metrics, and also examine their analyst ratings and insider activity trends.
One of the key things investors look for in a company is the ability to grow earnings at a high compound rate over time. Comparatively, EVH is expected to grow at a 30.00% annual rate. All else equal, EVH’s higher growth rate would imply a greater potential for capital appreciation.
Profitability and Returns
A high growth rate isn’t necessarily valuable to investors. In fact, companies that overinvest in low return projects just to achieve a high growth rate can actually destroy shareholder value. Profitability and returns are a measure of the quality of a company’s business and its growth opportunities. We’ll use Return on Investment (ROI) to measure this. RNVA’s ROI is 1582.90% while EVH has a ROI of -27.50%. The interpretation is that RNVA’s business generates a higher return on investment than EVH’s.
Cash is king when it comes to investing. RNVA’s free cash flow (“FCF”) per share for the trailing twelve months was -2.78. Comparatively, EVH’s free cash flow per share was +0.03. On a percent-of-sales basis, RNVA’s free cash flow was -0.3% while EVH converted 0% of its revenues into cash flow. This means that, for a given level of sales, EVH is able to generate more free cash flow for investors.
Liquidity and Financial Risk
Liquidity and leverage ratios provide insight into the financial health of a company, and allow investors to determine the likelihood that the company will be able to continue operating as a going concern. RNVA has a current ratio of 0.30 compared to 3.30 for EVH. This means that EVH can more easily cover its most immediate liabilities over the next twelve months.
RNVA trades at a P/S of 0.02, compared to a P/B of 0.99, and a P/S of 2.77 for EVH. Given that earnings are what matter most to investors, analysts tend to place a greater weight on the P/E.
Analyst Price Targets and Opinions
A cheap stock is not necessarily a value stock. Most of the time, a stock is cheap for good reason. A stock only has value if the current price is substantially below the price at which it should trade in the future. RNVA is currently priced at a -99.99% to its one-year price target of 555.00. Comparatively, EVH is -42.03% relative to its price target of 24.67. This suggests that RNVA is the better investment over the next year.
Rennova Health, Inc. (NASDAQ:RNVA) beats Evolent Health, Inc. (NYSE:EVH) on a total of 8 of the 14 factors compared between the two stocks. RNVA generates a higher return on investment and has lower financial risk. In terms of valuation, RNVA is the cheaper of the two stocks on book value and sales basis, RNVA is more undervalued relative to its price target. Finally, RNVA has better sentiment signals based on short interest.