The shares of Apple Inc. have increased by more than 3.25% this year alone. The shares recently went up by 0.34% or $0.59 and now trades at $174.73. The shares of Eleven Biotherapeutics, Inc. (NASDAQ:EBIO), has jumped by 71.39% year to date as of 04/13/2018. The shares currently trade at $1.39 and have been able to report a change of -7.33% over the past one week.
The stock of Apple Inc. and Eleven Biotherapeutics, Inc. were two of the most active stocks on Friday. 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. AAPL has an EBITDA margin of 32.13%, this implies that the underlying business of AAPL is more profitable. The ROI of AAPL is 18.30% while that of EBIO is -162.50%. These figures suggest that AAPL ventures generate a higher ROI than that of EBIO.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, AAPL’s free cash flow per share is a positive 9.5.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 AAPL is 1.20 and that of EBIO is 3.20. This implies that it is easier for AAPL to cover its immediate obligations over the next 12 months than EBIO. The debt ratio of AAPL is 0.87 compared to 0.00 for EBIO. AAPL can be able to settle its long-term debts and thus is a lower financial risk than EBIO.Valuation
AAPL currently trades at a forward P/E of 13.34, a P/B of 6.37, and a P/S of 3.74 while EBIO trades at a P/B of 2.36, and a P/S of 116.24. This means that looking at the earnings, book values and sales basis, AAPL 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 AAPL is currently at a -8.92% to its one-year price target of 191.85. Looking at its rival pricing, EBIO is at a -88.42% relative to its price target of 12.00.
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), AAPL is given a 2.10 while 2.00 placed for EBIO. This means that analysts are more bullish on the outlook for AAPL 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 AAPL is 1.42 while that of EBIO is just 0.86. This means that analysts are more bullish on the forecast for EBIO stock.
The stock of Apple Inc. defeats that of Eleven Biotherapeutics, Inc. when the two are compared, with AAPL taking 7 out of the total factors that were been considered. AAPL 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, AAPL is the cheaper one on an earnings, book value and sales basis. Finally, the sentiment signal for AAPL is better on when it is viewed on short interest.