The shares of American Axle & Manufacturing Holdings, Inc. have decreased by more than -4.29% this year alone. The shares recently went down by -0.55% or -$0.09 and now trades at $16.30. The shares of Azul S.A. (NYSE:AZUL), has slumped by -29.33% year to date as of 07/12/2018. The shares currently trade at $16.84 and have been able to report a change of 7.60% over the past one week.
The stock of American Axle & Manufacturing Holdings, Inc. and Azul S.A. 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. AXL has an EBITDA margin of 15.34%, this implies that the underlying business of AXL is more profitable. The ROI of AXL is 9.40% while that of AZUL is 12.60%. These figures suggest that AZUL ventures generate a higher ROI than that of AXL.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, AXL’s free cash flow per share is a negative -1.03, while that of AZUL is also a negative -0.79.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 AXL is 1.60 and that of AZUL is 0.90. This implies that it is easier for AXL to cover its immediate obligations over the next 12 months than AZUL. The debt ratio of AXL is 2.39 compared to 1.12 for AZUL. AXL can be able to settle its long-term debts and thus is a lower financial risk than AZUL.Valuation
AXL currently trades at a forward P/E of 4.67, a P/B of 1.08, and a P/S of 0.26 while AZUL trades at a forward P/E of 8.38, a P/B of 9.25, and a P/S of 0.88. This means that looking at the earnings, book values and sales basis, AXL 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 AXL is currently at a -20.25% to its one-year price target of 20.44. Looking at its rival pricing, AZUL is at a -45.68% relative to its price target of 31.00.
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), AXL is given a 2.30 while 1.50 placed for AZUL. This means that analysts are more bullish on the outlook for AXL 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 AXL is 4.43 while that of AZUL is just 3.54. This means that analysts are more bullish on the forecast for AZUL stock.
The stock of American Axle & Manufacturing Holdings, Inc. defeats that of Azul S.A. when the two are compared, with AXL taking 6 out of the total factors that were been considered. AXL 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, AXL is the cheaper one on an earnings, book value and sales basis. Finally, the sentiment signal for AXL is better on when it is viewed on short interest.