Which Market Offer More Value? – Clovis Oncology, Inc. (CLVS), Fabrinet (FN)

The shares of Clovis Oncology, Inc. have decreased by more than -19.99% this year alone. The shares recently went down by -10.27% or -$6.23 and now trades at $54.41. The shares of Fabrinet (NYSE:FN), has jumped by 5.12% year to date as of 04/16/2018. The shares currently trade at $30.17 and have been able to report a change of -2.20% over the past one week.

The stock of Clovis Oncology, Inc. and Fabrinet 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. The ROI of CLVS is -27.30% while that of FN is 13.10%. These figures suggest that FN ventures generate a higher ROI than that of CLVS.

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, CLVS’s free cash flow per share is a negative -0.12, while that of FN is positive 2.07.

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 CLVS is 7.70 and that of FN is 2.80. This implies that it is easier for CLVS to cover its immediate obligations over the next 12 months than FN. The debt ratio of CLVS is 0.77 compared to 0.10 for FN. CLVS can be able to settle its long-term debts and thus is a lower financial risk than FN.


CLVS currently trades at a P/B of 7.40, and a P/S of 50.23 while FN trades at a forward P/E of 9.11, a P/B of 1.57, and a P/S of 0.79. This means that looking at the earnings, book values and sales basis, FN 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 CLVS is currently at a -37.39% to its one-year price target of 86.90. Looking at its rival pricing, FN is at a -23.13% relative to its price target of 39.25.

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), CLVS is given a 2.00 while 1.80 placed for FN. This means that analysts are more bullish on the outlook for CLVS 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 CLVS is 5.79 while that of FN is just 4.78. This means that analysts are more bullish on the forecast for FN stock.


The stock of Clovis Oncology, Inc. defeats that of Fabrinet when the two are compared, with CLVS taking 3 out of the total factors that were been considered. CLVS 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, CLVS is the cheaper one on an earnings, book value and sales basis. Finally, the sentiment signal for CLVS is better on when it is viewed on short interest.

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