The shares of AXT, Inc. have decreased by more than -3.45% this year alone. The shares recently went up by 1.82% or $0.15 and now trades at $8.40. The shares of First Majestic Silver Corp. (NYSE:AG), has jumped by 13.06% year to date as of 07/12/2018. The shares currently trade at $7.62 and have been able to report a change of -5.22% over the past one week.
The stock of AXT, Inc. and First Majestic Silver Corp. 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: 10.00% versus 46.80%
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 AXTI will grow it’s earning at a 10.00% annual rate in the next 5 years. This is in contrast to AG which will have a positive growth at a 46.80% annual rate. This means that the higher growth rate of AG 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. AXTI has an EBITDA margin of 17.71%, this implies that the underlying business of AXTI is more profitable. These figures suggest that AXTI ventures generate a higher ROI than that of AG.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, AXTI’s free cash flow per share is a negative -0.01, while that of AG is also a negative -0.01.Valuation
AXTI currently trades at a forward P/E of 16.80, a P/B of 1.76, and a P/S of 3.14 while AG trades at a forward P/E of 108.86, a P/B of 2.11, and a P/S of 5.21. This means that looking at the earnings, book values and sales basis, AXTI 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 AXTI is currently at a -18.68% to its one-year price target of 10.33. Looking at its rival pricing, AG is at a -20.13% relative to its price target of 9.54.
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), AXTI is given a 1.80 while 2.30 placed for AG. This means that analysts are more bullish on the outlook for AG 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 AXTI is 8.57 while that of AG is just 9.46. This means that analysts are more bullish on the forecast for AXTI stock.
The stock of First Majestic Silver Corp. defeats that of AXT, Inc. when the two are compared, with AG taking 5 out of the total factors that were been considered. AG 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, AG is the cheaper one on an earnings, book value and sales basis. Finally, the sentiment signal for AG is better on when it is viewed on short interest.