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A Comparison of Top Movers: Chipotle Mexican Grill, Inc. (CMG), Pioneer Energy Services Corp. (PES)

The shares of Chipotle Mexican Grill, Inc. have increased by more than 0.30% this year alone. The shares recently went up by 15.35% or $38.58 and now trades at $289.91. The shares of Pioneer Energy Services Corp. (NYSE:PES), has slumped by -3.28% year to date as of 02/14/2018. The shares currently trade at $2.95 and have been able to report a change of -1.67% over the past one week.

The stock of Chipotle Mexican Grill, Inc. and Pioneer Energy Services Corp. were two of the most active stocks on Wednesday. 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. CMG has an EBITDA margin of 9.81%, this implies that the underlying business of CMG is more profitable. The ROI of CMG is 12.60% while that of PES is -16.60%. These figures suggest that CMG ventures generate a higher ROI than that of PES.



Cash Flow 

The value of a stock is ultimately determined by the amount of cash flow that the investors have available. Over the last 12 months, CMG’s free cash flow per share is a positive 0.82.

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 CMG is 1.90 and that of PES is 1.80. This implies that it is easier for CMG to cover its immediate obligations over the next 12 months than PES. The debt ratio of CMG is 0.00 compared to 1.77 for PES. PES can be able to settle its long-term debts and thus is a lower financial risk than CMG.

Valuation

CMG currently trades at a forward P/E of 26.83, a P/B of 5.98, and a P/S of 1.90 while PES trades at a P/B of 1.03, and a P/S of 0.60. This means that looking at the earnings, book values and sales basis, CMG 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 CMG is currently at a -3.82% to its one-year price target of 301.44. Looking at its rival pricing, PES is at a -26.25% relative to its price target of 4.00. This figure implies that over the next one year, PES 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), CMG is given a 3.00 while 2.40 placed for PES. This means that analysts are more bullish on the outlook for CMG 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 CMG is 2.62 while that of PES is just 2.97. This means that analysts are more bullish on the forecast for CMG stock.

Conclusion

The stock of Pioneer Energy Services Corp. defeats that of Chipotle Mexican Grill, Inc. when the two are compared, with PES taking 5 out of the total factors that were been considered. PES 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, PES is the cheaper one on an earnings, book value and sales basis. Finally, the sentiment signal for PES is better on when it is viewed on short interest.

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