Earnings

Rennova Health, Inc. (RNVA) vs. Evolent Health, Inc. (EVH): Which is the Better Investment?

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.

Growth

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 Flow 




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.

Valuation

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.

Summary

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.

Previous ArticleNext Article

Related Post

Critical Comparison: American Electric Power Compa... American Electric Power Company, Inc. (NYSE:AEP) shares are down more than -6.92% this year and recently decreased -0.42% or -$0.29 to settle at $68.4...
A Side-by-side Analysis of Halcon Resources Corpor...   Halcon Resources Corporation (NYSE:HK) shares are down more than -32.76% this year and recently decreased -1.72% or -$0.11 to settle at $6.2...
Dissecting the Numbers for The Bank of New York Me... The Bank of New York Mellon Corporation (NYSE:BK) shares are up more than 7.26% this year and recently decreased -0.78% or -$0.4 to settle at $50.82. ...
CareDx, Inc (CDNA) Key Indicators And Emerging The... CareDx, Inc (NASDAQ:CDNA) gained 33.02% in yesterday’s session, going up from its prior closing price of $2.15 to $2.86, and has now recorded rally in...
Fundamentals in Focus for GlaxoSmithKline plc (GSK... GlaxoSmithKline plc (NYSE:GSK) is one of the more popular stocks investors are adding into their watchlist. Now trading with a market value of 98.34B,...