The shares of MACOM Technology Solutions Holdings, Inc. have decreased by more than -46.14% this year alone. The shares recently went down by -9.20% or -$1.78 and now trades at $17.52. The shares of Zosano Pharma Corporation (NASDAQ:ZSAN), has slumped by -59.23% year to date as of 04/16/2018. The shares currently trade at $4.24 and have been able to report a change of -9.98% over the past one week.
The stock of MACOM Technology Solutions Holdings, Inc. and Zosano Pharma Corporation were two of the most active stocks on Monday. 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. MTSI has an EBITDA margin of 10.38%, this implies that the underlying business of MTSI is more profitable. These figures suggest that ZSAN ventures generate a higher ROI than that of MTSI.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 MTSI is 5.70 and that of ZSAN is 1.30. This implies that it is easier for MTSI to cover its immediate obligations over the next 12 months than ZSAN. The debt ratio of MTSI is 0.90 compared to 0.96 for ZSAN. ZSAN can be able to settle its long-term debts and thus is a lower financial risk than MTSI.Valuation
MTSI currently trades at a forward P/E of 15.02, a P/B of 1.47, and a P/S of 1.65 while ZSAN trades at a P/B of 1.18, This means that looking at the earnings, book values and sales basis, MTSI 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 MTSI is currently at a -40.77% to its one-year price target of 29.58. Looking at its rival pricing, ZSAN is at a -94.7% relative to its price target of 80.00.
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), MTSI is given a 2.50 while 2.00 placed for ZSAN. This means that analysts are more bullish on the outlook for MTSI 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 MTSI is 9.73 while that of ZSAN is just 0.35. This means that analysts are more bullish on the forecast for ZSAN stock.
The stock of MACOM Technology Solutions Holdings, Inc. defeats that of Zosano Pharma Corporation when the two are compared, with MTSI taking 5 out of the total factors that were been considered. MTSI 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, MTSI is the cheaper one on an earnings, book value and sales basis. Finally, the sentiment signal for MTSI is better on when it is viewed on short interest.