The shares of e.l.f. Beauty, Inc. have decreased by more than -55.85% this year alone. The shares recently went down by -33.94% or -$5.06 and now trades at $9.85. The shares of Carvana Co. (NYSE:CVNA), has jumped by 167.31% year to date as of 08/09/2018. The shares currently trade at $51.11 and have been able to report a change of 17.71% over the past one week.
The stock of e.l.f. Beauty, Inc. and Carvana Co. 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. ELF has an EBITDA margin of 17.9%, this implies that the underlying business of ELF is more profitable. The ROI of ELF is 9.30% while that of CVNA is -49.20%. These figures suggest that ELF ventures generate a higher ROI than that of CVNA.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, ELF’s free cash flow per share is a positive 0, while that of CVNA is negative -0.14.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 ELF is 3.20 and that of CVNA is 1.30. This implies that it is easier for ELF to cover its immediate obligations over the next 12 months than CVNA. The debt ratio of ELF is 0.78 compared to 19.33 for CVNA. CVNA can be able to settle its long-term debts and thus is a lower financial risk than ELF.Valuation
ELF currently trades at a forward P/E of 14.61, a P/B of 2.31, and a P/S of 1.68 while CVNA trades at a P/B of 42.95, and a P/S of 6.54. This means that looking at the earnings, book values and sales basis, ELF 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 ELF is currently at a -50.08% to its one-year price target of 19.73. Looking at its rival pricing, CVNA is at a 34.5% relative to its price target of 38.00.
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), ELF is given a 2.40 while 1.80 placed for CVNA. This means that analysts are more bullish on the outlook for ELF 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 ELF is 13.34 while that of CVNA is just 9.69. This means that analysts are more bullish on the forecast for CVNA stock.
The stock of Carvana Co. defeats that of e.l.f. Beauty, Inc. when the two are compared, with CVNA taking 3 out of the total factors that were been considered. CVNA 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, CVNA is the cheaper one on an earnings, book value and sales basis. Finally, the sentiment signal for CVNA is better on when it is viewed on short interest.