The shares of Ensco plc have decreased by more than -8.12% this year alone. The shares recently went up by 3.82% or $0.2 and now trades at $5.43. The shares of VirnetX Holding Corp (NYSE:VHC), has jumped by 1.35% year to date as of 04/13/2018. The shares currently trade at $3.75 and have been able to report a change of -5.06% over the past one week.
The stock of Ensco plc and VirnetX Holding Corp 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. ESV has an EBITDA margin of 25.13%, this implies that the underlying business of ESV is more profitable. These figures suggest that VHC ventures generate a higher ROI than that of ESV.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, ESV’s free cash flow per share is a negative -0.71, while that of VHC is also a negative -0.24.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 ESV is 2.10 and that of VHC is 1.20. This implies that it is easier for ESV to cover its immediate obligations over the next 12 months than VHC. The debt ratio of ESV is 0.54 compared to 0.00 for VHC. ESV can be able to settle its long-term debts and thus is a lower financial risk than VHC.Valuation
ESV currently trades at a P/B of 0.27, and a P/S of 1.24 while VHC trades at a P/B of 125.00, and a P/S of 162.80. This means that looking at the earnings, book values and sales basis, ESV 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 ESV is currently at a -14.08% to its one-year price target of 6.32. Looking at its rival pricing, VHC is at a 30.21% relative to its price target of 2.88.
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), ESV is given a 2.70 while 2.00 placed for VHC. This means that analysts are more bullish on the outlook for ESV 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 ESV is 7.17 while that of VHC is just 35.04. This means that analysts are more bullish on the forecast for ESV stock.
The stock of VirnetX Holding Corp defeats that of Ensco plc when the two are compared, with VHC taking 6 out of the total factors that were been considered. VHC 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, VHC is the cheaper one on an earnings, book value and sales basis. Finally, the sentiment signal for VHC is better on when it is viewed on short interest.