Earnings

Set Sail With TechnipFMC plc (FTI), Formula One Group (FWONK)

The shares of TechnipFMC plc have increased by more than 8.43% this year alone. The shares recently went up by 2.32% or $0.77 and now trades at $33.95. The shares of Formula One Group (NASDAQ:FWONK), has slumped by -9.87% year to date as of 05/17/2018. The shares currently trade at $30.79 and have been able to report a change of 2.60% over the past one week.

The stock of TechnipFMC plc and Formula One Group were two of the most active stocks on Thuday. 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. FTI has an EBITDA margin of 12.35%, this implies that the underlying business of FTI is more profitable. These figures suggest that FTI ventures generate a higher ROI than that of FWONK.

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, FTI’s free cash flow per share is a negative -1.7, while that of FWONK is also a negative -1.55.

Valuation



FTI currently trades at a forward P/E of 22.19, a P/B of 1.18, and a P/S of 1.11 while FWONK trades at a P/B of 1.25, and a P/S of 3.50. This means that looking at the earnings, book values and sales basis, FTI 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 FTI is currently at a -1.88% to its one-year price target of 34.60. Looking at its rival pricing, FWONK is at a -23.31% relative to its price target of 40.15.

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), FTI is given a 2.30 while 2.20 placed for FWONK. This means that analysts are more bullish on the outlook for FTI 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 FTI is 2.66 while that of FWONK is just 15.76. This means that analysts are more bullish on the forecast for FTI stock.

Conclusion

The stock of Formula One Group defeats that of TechnipFMC plc when the two are compared, with FWONK taking 6 out of the total factors that were been considered. FWONK 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, FWONK is the cheaper one on an earnings, book value and sales basis. Finally, the sentiment signal for FWONK is better on when it is viewed on short interest.

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