Earnings

Which is more compelling pick right now? – Euronav NV (EURN), ArQule, Inc. (ARQL)

The shares of Euronav NV have decreased by more than -3.78% this year alone. The shares recently went down by -2.20% or -$0.2 and now trades at $8.90. The shares of ArQule, Inc. (NASDAQ:ARQL), has jumped by 249.70% year to date as of 07/12/2018. The shares currently trade at $5.77 and have been able to report a change of 1.76% over the past one week.

The stock of Euronav NV and ArQule, 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: -13.00% versus 5.00%

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 EURN will grow it’s earning at a -13.00% annual rate in the next 5 years. This is in contrast to ARQL which will have a positive growth at a 5.00% annual rate. This means that the higher growth rate of ARQL 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. These figures suggest that EURN ventures generate a higher ROI than that of ARQL.

Valuation



EURN currently trades at a forward P/E of 49.44, a P/B of 0.78, and a P/S of 3.15 while ARQL trades at a P/B of 52.45, and a P/S of 122.59. This means that looking at the earnings, book values and sales basis, EURN 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 EURN is currently at a -18.27% to its one-year price target of 10.89. Looking at its rival pricing, ARQL is at a -17.1% relative to its price target of 6.96.

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), EURN is given a 2.00 while 1.70 placed for ARQL. This means that analysts are more bullish on the outlook for EURN 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 EURN is 18.67 while that of ARQL is just 0.65. This means that analysts are more bullish on the forecast for ARQL stock.

Conclusion

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

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