Earnings

Which of these 2 stocks can turn out to be absolute gem? – MER Telemanagement Solutions Ltd. (MTSL), Radisys Corporation (RSYS)

The shares of MER Telemanagement Solutions Ltd. have decreased by more than -25.12% this year alone. The shares recently went down by -27.85% or -$0.61 and now trades at $1.58. The shares of Radisys Corporation (NASDAQ:RSYS), has jumped by 54.23% year to date as of 07/12/2018. The shares currently trade at $1.55 and have been able to report a change of 2.65% over the past one week.

The stock of MER Telemanagement Solutions Ltd. and Radisys Corporation 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 MTSL is -109.40% while that of RSYS is -71.60%. These figures suggest that RSYS ventures generate a higher ROI than that of MTSL.

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

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 MTSL is 0.70 and that of RSYS is 1.10. This implies that it is easier for MTSL to cover its immediate obligations over the next 12 months than RSYS. The debt ratio of MTSL is 0.00 compared to 69.67 for RSYS. RSYS can be able to settle its long-term debts and thus is a lower financial risk than MTSL.

Valuation

MTSL currently trades at a P/B of 2.87, and a P/S of 0.58 while RSYS trades at a forward P/E of 44.29, a P/B of 155.00, and a P/S of 0.50. This means that looking at the earnings, book values and sales basis, MTSL 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. Looking at its rival pricing, RSYS is at a -30.49% relative to its price target of 2.23.

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 MTSL is 0.16 while that of RSYS is just 3.17. This means that analysts are more bullish on the forecast for MTSL stock.

Conclusion

The stock of Radisys Corporation defeats that of MER Telemanagement Solutions Ltd. when the two are compared, with RSYS taking 5 out of the total factors that were been considered. RSYS 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, RSYS is the cheaper one on an earnings, book value and sales basis. Finally, the sentiment signal for RSYS is better on when it is viewed on short interest.

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