The shares of Fossil Group, Inc. have increased by more than 118.40% this year alone. The shares recently went up by 87.72% or $7.93 and now trades at $16.97. The shares of Criteo S.A. (NASDAQ:CRTO), has jumped by 16.21% year to date as of 02/14/2018. The shares currently trade at $30.25 and have been able to report a change of 36.75% over the past one week.
The stock of Fossil Group, Inc. and Criteo S.A. 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.
Next 5Y EPS Growth: 17.30% versus -0.85%
When a company is able to grow consistently in terms of earnings at a high compound rate have the highest likelihood of creating value for its shareholders over time. Analysts have predicted that FOSL will grow it’s earning at a 17.30% annual rate in the next 5 years. This is in contrast to CRTO which will have a positive growth at a -0.85% annual rate. This means that the higher growth rate of FOSL implies a greater potential for capital appreciation over the years.
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 FOSL is 6.00% while that of CRTO is 12.80%. These figures suggest that CRTO ventures generate a higher ROI than that of FOSL.
The value of a stock is ultimately determined by the amount of cash flow that the investors have available. Over the last 12 months, FOSL’s free cash flow per share is a positive 0.67, while that of CRTO is positive 1.91.
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 FOSL is 2.30 and that of CRTO is 1.60. This implies that it is easier for FOSL to cover its immediate obligations over the next 12 months than CRTO. The debt ratio of FOSL is 0.76 compared to 0.01 for CRTO. FOSL can be able to settle its long-term debts and thus is a lower financial risk than CRTO.
FOSL currently trades at a P/B of 1.28, and a P/S of 0.28 while CRTO trades at a forward P/E of 16.48, a P/B of 2.48, and a P/S of 0.92. This means that looking at the earnings, book values and sales basis, FOSL 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 FOSL is currently at a 155.96% to its one-year price target of 6.63. Looking at its rival pricing, CRTO is at a -15% relative to its price target of 35.59. This figure implies that over the next one year, CRTO 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), FOSL is given a 3.50 while 2.50 placed for CRTO. This means that analysts are more bullish on the outlook for FOSL 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 FOSL is 8.62 while that of CRTO is just 3.45. This means that analysts are more bullish on the forecast for CRTO stock.
The stock of Fossil Group, Inc. defeats that of Criteo S.A. when the two are compared, with FOSL taking 6 out of the total factors that were been considered. FOSL 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, FOSL is the cheaper one on an earnings, book value and sales basis. Finally, the sentiment signal for FOSL is better on when it is viewed on short interest.