Earnings

Financially Devastating or Fantastic? – LendingClub Corporation (LC), Staffing 360 Solutions, Inc. (STAF)

The shares of LendingClub Corporation have increased by more than 7.99% this year alone. The shares of Staffing 360 Solutions, Inc. (NASDAQ:STAF), has slumped by -2.22% year to date as of 07/12/2018. The shares currently trade at $3.08 and have been able to report a change of 100.00% over the past one week.

The stock of LendingClub Corporation and Staffing 360 Solutions, 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. The ROI of LC is -4.90% while that of STAF is -38.20%. These figures suggest that LC ventures generate a higher ROI than that of STAF.

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, LC’s free cash flow per share is a positive 0.

Valuation



LC currently trades at a forward P/E of 23.60, a P/B of 2.05, and a P/S of 1.66 while STAF trades at a P/S of 0.06. This means that looking at the earnings, book values and sales basis, LC 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 LC is currently at a -13.23% to its one-year price target of 5.14. Looking at its rival pricing, STAF is at a -73.79% relative to its price target of 11.75.

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), LC is given a 2.50 while 1.50 placed for STAF. This means that analysts are more bullish on the outlook for LC 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 LC is 7.14 while that of STAF is just 0.11. This means that analysts are more bullish on the forecast for STAF stock.

Conclusion

The stock of LendingClub Corporation defeats that of Staffing 360 Solutions, Inc. when the two are compared, with LC taking 1 out of the total factors that were been considered. LC 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, LC is the cheaper one on an earnings, book value and sales basis. Finally, the sentiment signal for LC is better on when it is viewed on short interest.

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