Corning Incorporated (NYSE:GLW) shares are down more than -13.00% this year and recently decreased -1.03% or -$0.29 to settle at $27.83. Camping World Holdings, Inc. (NYSE:CWH), on the other hand, is down -50.75% year to date as of 05/17/2018. It currently trades at $21.99 and has returned -5.01% during the past week.
Corning Incorporated (NYSE:GLW) and Camping World Holdings, Inc. (NYSE:CWH) are the two most active stocks in the Diversified Electronics industry based on today’s trading volumes. Investors are clearly interested in the two names, but is one a better choice than the other? We will compare the two companies across growth, profitability, risk, valuation, and insider trends to answer this question.Growth
Companies that can consistently grow earnings at a high compound rate usually have the greatest potential to create value for shareholders in the long-run. Analysts expect GLW to grow earnings at a 10.12% annual rate over the next 5 years. Comparatively, CWH is expected to grow at a 10.70% annual rate. All else equal, CWH’s higher growth rate would imply a greater potential for capital appreciation.Profitability and Returns
Growth isn’t very attractive to investors if companies are sacrificing profitability and shareholder returns to achieve that growth. We will use EBITDA margin and Return on Investment (ROI), which control for differences in capital structure between the two companies, to measure profitability and return., compared to an EBITDA margin of 8.79% for Camping World Holdings, Inc. (CWH). GLW’s ROI is -2.40% while CWH has a ROI of 16.50%. The interpretation is that CWH’s business generates a higher return on investment than GLW’s.Cash Flow
Cash is king when it comes to investing. GLW’s free cash flow (“FCF”) per share for the trailing twelve months was -0.60. Comparatively, CWH’s free cash flow per share was -1.70. On a percent-of-sales basis, GLW’s free cash flow was -4.93% while CWH converted -3.47% of its revenues into cash flow. This means that, for a given level of sales, CWH is able to generate more free cash flow for investors.Liquidity and Financial Risk
Liquidity and leverage ratios are important because they reveal the financial health of a company. GLW has a current ratio of 2.60 compared to 1.50 for CWH. This means that GLW can more easily cover its most immediate liabilities over the next twelve months. GLW’s debt-to-equity ratio is 0.43 versus a D/E of 37.05 for CWH. CWH is therefore the more solvent of the two companies, and has lower financial risk.Valuation
GLW trades at a forward P/E of 14.29, a P/B of 1.95, and a P/S of 2.30, compared to a forward P/E of 6.81, a P/B of 14.10, and a P/S of 0.45 for CWH. GLW is the cheaper of the two stocks on book value basis but is expensive in terms of P/E and P/S ratio. Given that earnings are what matter most to investors, analysts tend to place a greater weight on the P/E.
Analyst Price Targets and Opinions
A cheap stock isn’t a good investment if the stock is priced accurately. To get a sense of “value” we must compare the current price to some measure of intrinsic value such as a price target. GLW is currently priced at a -15.9% to its one-year price target of 33.09. Comparatively, CWH is -57.95% relative to its price target of 52.30. This suggests that CWH is the better investment over the next year.
Insider Activity and Investor Sentiment
The analysis of insider buying and selling trends can be extended to the aggregate level. Short interest, which represents the percentage of a stock’s tradable shares currently being shorted, captures what the market as a whole feels about a stock. GLW has a short ratio of 2.50 compared to a short interest of 1.93 for CWH. This implies that the market is currently less bearish on the outlook for CWH.Summary
Camping World Holdings, Inc. (NYSE:CWH) beats Corning Incorporated (NYSE:GLW) on a total of 9 of the 14 factors compared between the two stocks. CWH is more profitable, generates a higher return on investment and has a higher cash conversion rate. In terms of valuation, CWH is the cheaper of the two stocks on an earnings and sales basis, CWH is more undervalued relative to its price target. Finally, CWH has better sentiment signals based on short interest.