Earnings

Taking Tally Of PDC Energy, Inc. (PDCE), Audentes Therapeutics, Inc. (BOLD)

The shares of PDC Energy, Inc. have increased by more than 6.13% this year alone. The shares recently went down by -11.09% or -$6.82 and now trades at $54.70. The shares of Audentes Therapeutics, Inc. (NASDAQ:BOLD), has jumped by 9.60% year to date as of 08/07/2018. The shares currently trade at $34.25 and have been able to report a change of -9.03% over the past one week.

The stock of PDC Energy, Inc. and Audentes Therapeutics, Inc. were two of the most active stocks on Tuesday. 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: 38.40% versus 8.80%

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 PDCE will grow it’s earning at a 38.40% annual rate in the next 5 years. This is in contrast to BOLD which will have a positive growth at a 8.80% annual rate. This means that the higher growth rate of PDCE 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. PDCE has an EBITDA margin of 11.99%, this implies that the underlying business of PDCE is more profitable. These figures suggest that BOLD ventures generate a higher ROI than that of PDCE.

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 PDCE is 0.50 and that of BOLD is 20.40. This implies that it is easier for PDCE to cover its immediate obligations over the next 12 months than BOLD. The debt ratio of PDCE is 0.46 compared to 0.00 for BOLD. PDCE can be able to settle its long-term debts and thus is a lower financial risk than BOLD.

Valuation

PDCE currently trades at a forward P/E of 11.37, a P/B of 1.44, and a P/S of 3.91 while BOLD trades at a P/B of 3.36, This means that looking at the earnings, book values and sales basis, PDCE 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 PDCE is currently at a -26.75% to its one-year price target of 74.68. Looking at its rival pricing, BOLD is at a -17.01% relative to its price target of 41.27.




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), PDCE is given a 1.90 while 2.00 placed for BOLD. This means that analysts are more bullish on the outlook for BOLD 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 PDCE is 4.74 while that of BOLD is just 4.97. This means that analysts are more bullish on the forecast for PDCE stock.

Conclusion

The stock of Audentes Therapeutics, Inc. defeats that of PDC Energy, Inc. when the two are compared, with BOLD taking 6 out of the total factors that were been considered. BOLD 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, BOLD is the cheaper one on an earnings, book value and sales basis. Finally, the sentiment signal for BOLD is better on when it is viewed on short interest.

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