The shares of Pieris Pharmaceuticals, Inc. have increased by more than 15.23% this year alone. The shares recently went down by -7.94% or -$0.75 and now trades at $8.70. The shares of Ceragon Networks Ltd. (NASDAQ:CRNT), has jumped by 21.72% year to date as of 02/14/2018. The shares currently trade at $2.41 and have been able to report a change of 12.09% over the past one week.
The stock of Pieris Pharmaceuticals, Inc. and Ceragon Networks Ltd. 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. The ROI of PIRS is -91.00% while that of CRNT is 13.30%. These figures suggest that CRNT ventures generate a higher ROI than that of PIRS.
The value of a stock is ultimately determined by the amount of cash flow that the investors have available. Over the last 12 months, PIRS’s free cash flow per share is a positive 0.61.
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 PIRS is 2.40 and that of CRNT is 1.80. This implies that it is easier for PIRS to cover its immediate obligations over the next 12 months than CRNT. The debt ratio of PIRS is 0.00 compared to 0.19 for CRNT. CRNT can be able to settle its long-term debts and thus is a lower financial risk than PIRS.
PIRS currently trades at a P/B of 87.00, and a P/S of 33.10 while CRNT trades at a forward P/E of 13.39, a P/B of 1.48, and a P/S of 0.59. This means that looking at the earnings, book values and sales basis, CRNT 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 PIRS is currently at a -17.14% to its one-year price target of 10.50. Looking at its rival pricing, CRNT is at a -3.6% relative to its price target of 2.50. This figure implies that over the next one year, CRNT 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), PIRS is given a 1.50 while 3.00 placed for CRNT. This means that analysts are more bullish on the outlook for CRNT 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 PIRS is 1.35 while that of CRNT is just 1.05. This means that analysts are more bullish on the forecast for CRNT stock.
The stock of Ceragon Networks Ltd. defeats that of Pieris Pharmaceuticals, Inc. when the two are compared, with CRNT taking 6 out of the total factors that were been considered. CRNT 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, CRNT is the cheaper one on an earnings, book value and sales basis. Finally, the sentiment signal for CRNT is better on when it is viewed on short interest.