Earnings

Comparing Top Moving Stocks MaxLinear, Inc. (MXL), SeaWorld Entertainment, Inc. (SEAS)

The shares of MaxLinear, Inc. have decreased by more than -34.90% this year alone. The shares recently went up by 1.12% or $0.19 and now trades at $17.20. The shares of SeaWorld Entertainment, Inc. (NYSE:SEAS), has jumped by 58.00% year to date as of 07/12/2018. The shares currently trade at $21.44 and have been able to report a change of -5.01% over the past one week.

The stock of MaxLinear, Inc. and SeaWorld Entertainment, 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.

Next 5Y EPS Growth: 1.44% versus -6.00%

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 MXL will grow it’s earning at a 1.44% annual rate in the next 5 years. This is in contrast to SEAS which will have a positive growth at a -6.00% annual rate. This means that the higher growth rate of MXL 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. MXL has an EBITDA margin of 17.25%, this implies that the underlying business of MXL is more profitable. The ROI of MXL is 2.70% while that of SEAS is -6.90%. These figures suggest that MXL ventures generate a higher ROI than that of SEAS.

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, MXL’s free cash flow per share is a positive 0, while that of SEAS is negative -2.1.

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 MXL is 3.00 and that of SEAS is 0.40. This implies that it is easier for MXL to cover its immediate obligations over the next 12 months than SEAS. The debt ratio of MXL is 0.00 compared to 6.63 for SEAS. SEAS can be able to settle its long-term debts and thus is a lower financial risk than MXL.

Valuation

MXL currently trades at a forward P/E of 10.27, a P/B of 2.86, and a P/S of 2.59 while SEAS trades at a forward P/E of 40.84, a P/B of 7.77, and a P/S of 1.44. This means that looking at the earnings, book values and sales basis, MXL 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 MXL is currently at a -32.1% to its one-year price target of 25.33. Looking at its rival pricing, SEAS is at a 40.77% relative to its price target of 15.23.

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), MXL is given a 2.00 while 2.50 placed for SEAS. This means that analysts are more bullish on the outlook for SEAS 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 MXL is 8.68 while that of SEAS is just 8.15. This means that analysts are more bullish on the forecast for SEAS stock.

Conclusion

The stock of SeaWorld Entertainment, Inc. defeats that of MaxLinear, Inc. when the two are compared, with SEAS taking 2 out of the total factors that were been considered. SEAS 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, SEAS is the cheaper one on an earnings, book value and sales basis. Finally, the sentiment signal for SEAS is better on when it is viewed on short interest.

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