Earnings

Taking Tally Of Sealed Air Corporation (SEE), Archrock, Inc. (AROC)

The shares of Sealed Air Corporation have decreased by more than -9.17% this year alone. The shares recently went up by 2.00% or $0.88 and now trades at $44.78. The shares of Archrock, Inc. (NYSE:AROC), has slumped by -3.33% year to date as of 04/16/2018. The shares currently trade at $10.15 and have been able to report a change of 12.78% over the past one week.

The stock of Sealed Air Corporation and Archrock, Inc. 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.

Next 5Y EPS Growth: 19.35% versus -12.91%

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 SEE will grow it’s earning at a 19.35% annual rate in the next 5 years. This is in contrast to AROC which will have a positive growth at a -12.91% annual rate. This means that the higher growth rate of SEE 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. SEE has an EBITDA margin of 16.68%, this implies that the underlying business of SEE is more profitable. The ROI of SEE is 9.00% while that of AROC is 2.50%. These figures suggest that SEE ventures generate a higher ROI than that of AROC.

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, SEE’s free cash flow per share is a positive 0.15.

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 SEE is 1.40 and that of AROC is 1.70. This implies that it is easier for SEE to cover its immediate obligations over the next 12 months than AROC. The debt ratio of SEE is 21.39 compared to 1.82 for AROC. SEE can be able to settle its long-term debts and thus is a lower financial risk than AROC.

Valuation

SEE currently trades at a forward P/E of 15.94, a P/B of 51.47, and a P/S of 1.67 while AROC trades at a forward P/E of 23.71, a P/B of 0.91, and a P/S of 0.93. This means that looking at the earnings, book values and sales basis, SEE 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 SEE is currently at a -9.32% to its one-year price target of 49.38. Looking at its rival pricing, AROC is at a -23.4% relative to its price target of 13.25.

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), SEE is given a 2.30 while 2.10 placed for AROC. This means that analysts are more bullish on the outlook for SEE 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 SEE is 4.97 while that of AROC is just 5.83. This means that analysts are more bullish on the forecast for SEE stock.

Conclusion

The stock of Archrock, Inc. defeats that of Sealed Air Corporation when the two are compared, with AROC taking 6 out of the total factors that were been considered. AROC 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, AROC is the cheaper one on an earnings, book value and sales basis. Finally, the sentiment signal for AROC is better on when it is viewed on short interest.

Previous ArticleNext Article

Related Post

Reliable Long-term Trend to Profit From: Teva Phar... The shares of Teva Pharmaceutical Industries Limited have increased by more than 27.34% this year alone. The shares recently went up by 0.88% or $0.21...
Comparing The Cheesecake Factory Incorporated (CAK... The Cheesecake Factory Incorporated (NASDAQ:CAKE) shares are down more than -19.02% this year and recently increased 1.02% or $0.49 to settle at $48.4...
How Insiders and Institutions are Trading Tesla, I... Recent insider trends for Tesla, Inc. (NASDAQ:TSLA) have caught the attention of investors. Analysts monitor insider data to understand the sentiment ...
Choosing Between Arena Pharmaceuticals, Inc. (ARNA... Arena Pharmaceuticals, Inc. (NASDAQ:ARNA) shares are up more than 9.71% this year and recently increased 5.58% or $1.97 to settle at $37.27. Idera Pha...
Critical Comparison: Redfin Corporation (RDFN) vs.... Redfin Corporation (NASDAQ:RDFN) and IAC/InterActiveCorp (NASDAQ:IAC) are the two most active stocks in the Internet Information Providers industry ba...