Earnings

Which is more compelling pick right now? – Universal Corporation (UVV), Evolus, Inc. (EOLS)

The shares of Universal Corporation have increased by more than 19.71% this year alone. The shares recently went up by 29.72% or $14.4 and now trades at $62.85. The shares of Evolus, Inc. (NASDAQ:EOLS), has jumped by 106.96% year to date as of 05/24/2018. The shares currently trade at $23.80 and have been able to report a change of 83.93% over the past one week.

The stock of Universal Corporation and Evolus, Inc. were two of the most active stocks on Thursday. 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. UVV has an EBITDA margin of 15.81%, this implies that the underlying business of UVV is more profitable. These figures suggest that UVV ventures generate a higher ROI than that of EOLS.

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 UVV is 6.20 and that of EOLS is 13.80. This implies that it is easier for UVV to cover its immediate obligations over the next 12 months than EOLS. The debt ratio of UVV is 0.32 compared to 0.31 for EOLS. UVV can be able to settle its long-term debts and thus is a lower financial risk than EOLS.

Valuation



UVV currently trades at a P/B of 1.20, and a P/S of 0.75 while EOLS trades at a P/B of 10.82, This means that looking at the earnings, book values and sales basis, UVV 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 UVV is currently at a 6.53% to its one-year price target of 59.00. Looking at its rival pricing, EOLS is at a 5.78% relative to its price target of 22.50.

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 UVV is 3.33 while that of EOLS is just 2.78. This means that analysts are more bullish on the forecast for EOLS stock.




Conclusion

The stock of Universal Corporation defeats that of Evolus, Inc. when the two are compared, with UVV taking 5 out of the total factors that were been considered. UVV 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, UVV is the cheaper one on an earnings, book value and sales basis. Finally, the sentiment signal for UVV is better on when it is viewed on short interest.

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