The shares of Rapid7, Inc. have increased by more than 76.26% this year alone. The shares recently went up by 2.81% or $0.9 and now trades at $32.89. The shares of BT Group plc (NYSE:BT), has slumped by -18.33% year to date as of 08/09/2018. The shares currently trade at $14.88 and have been able to report a change of -1.39% over the past one week.
The stock of Rapid7, Inc. and BT Group plc 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: -0.53% versus -11.50%
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 RPD will grow it’s earning at a -0.53% annual rate in the next 5 years. This is in contrast to BT which will have a positive growth at a -11.50% annual rate. This means that the higher growth rate of RPD 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. The ROI of RPD is -193.20% while that of BT is 10.50%. These figures suggest that BT ventures generate a higher ROI than that of RPD.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, RPD’s free cash flow per share is a positive 0, while that of BT is negative -0.19.Valuation
RPD currently trades at a P/B of 20.05, and a P/S of 7.14 while BT trades at a forward P/E of 8.53, a P/B of 2.15, and a P/S of 0.93. This means that looking at the earnings, book values and sales basis, BT 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 RPD is currently at a -4.67% to its one-year price target of 34.50. Looking at its rival pricing, BT is at a -17.43% relative to its price target of 18.02.
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), RPD is given a 2.10 while 2.00 placed for BT. This means that analysts are more bullish on the outlook for RPD 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 RPD is 1.67 while that of BT is just 2.47. This means that analysts are more bullish on the forecast for RPD stock.
The stock of BT Group plc defeats that of Rapid7, Inc. when the two are compared, with BT taking 6 out of the total factors that were been considered. BT 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, BT is the cheaper one on an earnings, book value and sales basis. Finally, the sentiment signal for BT is better on when it is viewed on short interest.