The shares of Berkshire Hathaway Inc. have increased by more than 0.48% this year alone. The shares recently went down by -0.06% or -$0.12 and now trades at $199.18. The shares of US Foods Holding Corp. (NYSE:USFD), has jumped by 6.70% year to date as of 05/14/2018. The shares currently trade at $34.07 and have been able to report a change of 1.04% over the past one week.
The stock of Berkshire Hathaway Inc. and US Foods Holding Corp. 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: 8.80% versus 27.29%
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 BRK-B will grow it’s earning at a 8.80% annual rate in the next 5 years. This is in contrast to USFD which will have a positive growth at a 27.29% annual rate. This means that the higher growth rate of USFD 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. These figures suggest that USFD ventures generate a higher ROI than that of BRK-B.Valuation
BRK-B currently trades at a forward P/E of 20.24, a P/B of 0.00, and a P/S of 2.05 while USFD trades at a forward P/E of 14.42, a P/B of 2.58, and a P/S of 0.31. This means that looking at the earnings, book values and sales basis, BRK-B 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 BRK-B is currently at a -14.7% to its one-year price target of 233.50. Looking at its rival pricing, USFD is at a -10.88% relative to its price target of 38.23.
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), BRK-B is given a 2.20 while 2.10 placed for USFD. This means that analysts are more bullish on the outlook for BRK-B 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 BRK-B is 2.62 while that of USFD is just 3.74. This means that analysts are more bullish on the forecast for BRK-B stock.
The stock of Berkshire Hathaway Inc. defeats that of US Foods Holding Corp. when the two are compared, with BRK-B taking 4 out of the total factors that were been considered. BRK-B 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, BRK-B is the cheaper one on an earnings, book value and sales basis. Finally, the sentiment signal for BRK-B is better on when it is viewed on short interest.