The shares of iPass Inc. have decreased by more than -47.11% this year alone. The shares recently went down by -29.31% or -$0.11 and now trades at $0.28. The shares of IAC/InterActiveCorp (NASDAQ:IAC), has jumped by 49.33% year to date as of 08/09/2018. The shares currently trade at $182.60 and have been able to report a change of 19.76% over the past one week.
The stock of iPass Inc. and IAC/InterActiveCorp 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: 25.00% versus 36.22%
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 IPAS will grow it’s earning at a 25.00% annual rate in the next 5 years. This is in contrast to IAC which will have a positive growth at a 36.22% annual rate. This means that the higher growth rate of IAC 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. These figures suggest that IAC ventures generate a higher ROI than that of IPAS.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, IPAS’s free cash flow per share is a negative -0.01, while that of IAC is positive 3.9.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 IPAS is 0.70 and that of IAC is 2.70. This implies that it is easier for IPAS to cover its immediate obligations over the next 12 months than IAC.Valuation
IPAS currently trades at a P/S of 0.37 while IAC trades at a forward P/E of 29.72, a P/B of 6.07, and a P/S of 4.16. This means that looking at the earnings, book values and sales basis, IPAS 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 IPAS is currently at a -80.69% to its one-year price target of 1.45. Looking at its rival pricing, IAC is at a -4.93% relative to its price target of 192.06.
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), IPAS is given a 2.00 while 1.70 placed for IAC. This means that analysts are more bullish on the outlook for IPAS 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 IPAS is 3.82 while that of IAC is just 3.18. This means that analysts are more bullish on the forecast for IAC stock.
The stock of iPass Inc. defeats that of IAC/InterActiveCorp when the two are compared, with IPAS taking 6 out of the total factors that were been considered. IPAS 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, IPAS is the cheaper one on an earnings, book value and sales basis. Finally, the sentiment signal for IPAS is better on when it is viewed on short interest.