The shares of Spectrum Brands Holdings, Inc. have decreased by more than -23.78% this year alone. The shares recently went down by -3.59% or -$2.96 and now trades at $79.60. The shares of Old Dominion Freight Line, Inc. (NASDAQ:ODFL), has jumped by 8.67% year to date as of 07/16/2018. The shares currently trade at $142.95 and have been able to report a change of -5.90% over the past one week.
The stock of Spectrum Brands Holdings, Inc. and Old Dominion Freight Line, Inc. were two of the most active stocks on Monday. 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: 4.37% versus 17.33%
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 SPB will grow it’s earning at a 4.37% annual rate in the next 5 years. This is in contrast to ODFL which will have a positive growth at a 17.33% annual rate. This means that the higher growth rate of ODFL 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. SPB has an EBITDA margin of 14.48%, this implies that the underlying business of ODFL is more profitable. The ROI of SPB is 9.00% while that of ODFL is 15.10%. These figures suggest that ODFL ventures generate a higher ROI than that of SPB.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, SPB’s free cash flow per share is a negative -0.77, while that of ODFL is positive 2.96.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 SPB is 2.80 and that of ODFL is 1.80. This implies that it is easier for SPB to cover its immediate obligations over the next 12 months than ODFL. The debt ratio of SPB is 2.56 compared to 0.02 for ODFL. SPB can be able to settle its long-term debts and thus is a lower financial risk than ODFL.Valuation
SPB currently trades at a forward P/E of 16.39, a P/B of 2.68, and a P/S of 1.12 while ODFL trades at a forward P/E of 19.63, a P/B of 4.98, and a P/S of 3.28. This means that looking at the earnings, book values and sales basis, SPB 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 SPB is currently at a -16.98% to its one-year price target of 95.88. Looking at its rival pricing, ODFL is at a -4.85% relative to its price target of 150.23.
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), SPB is given a 2.00 while 2.60 placed for ODFL. This means that analysts are more bullish on the outlook for ODFL 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 SPB is 17.94 while that of ODFL is just 5.04. This means that analysts are more bullish on the forecast for ODFL stock.
The stock of Spectrum Brands Holdings, Inc. defeats that of Old Dominion Freight Line, Inc. when the two are compared, with SPB taking 7 out of the total factors that were been considered. SPB 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, SPB is the cheaper one on an earnings, book value and sales basis. Finally, the sentiment signal for SPB is better on when it is viewed on short interest.