Earnings

Financially Devastating or Fantastic? – Altice USA, Inc. (ATUS), Vodafone Group Plc (VOD)

The shares of Altice USA, Inc. have increased by more than 2.19% this year alone. The shares recently went up by 3.23% or $0.55 and now trades at $17.58. The shares of Vodafone Group Plc (NASDAQ:VOD), has slumped by -24.04% year to date as of 08/09/2018. The shares currently trade at $24.23 and have been able to report a change of 0.96% over the past one week.

The stock of Altice USA, Inc. and Vodafone 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: 3.00% versus 18.50%

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 ATUS will grow it’s earning at a 3.00% annual rate in the next 5 years. This is in contrast to VOD which will have a positive growth at a 18.50% annual rate. This means that the higher growth rate of VOD 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 ATUS is 2.80% while that of VOD is 4.80%. These figures suggest that VOD ventures generate a higher ROI than that of ATUS.

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, ATUS’s free cash flow per share is a positive 0.

Valuation

ATUS currently trades at a forward P/E of 41.86, a P/B of 2.30, and a P/S of 1.37 while VOD trades at a forward P/E of 32.01, a P/B of 0.82, and a P/S of 1.19. This means that looking at the earnings, book values and sales basis, VOD 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 ATUS is currently at a -32.64% to its one-year price target of 26.10. Looking at its rival pricing, VOD is at a -29.67% relative to its price target of 34.45.




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), ATUS is given a 2.00 while 1.00 placed for VOD. This means that analysts are more bullish on the outlook for ATUS 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 ATUS is 1.90 while that of VOD is just 0.71. This means that analysts are more bullish on the forecast for VOD stock.

Conclusion

The stock of Altice USA, Inc. defeats that of Vodafone Group Plc when the two are compared, with ATUS taking 3 out of the total factors that were been considered. ATUS 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, ATUS is the cheaper one on an earnings, book value and sales basis. Finally, the sentiment signal for ATUS is better on when it is viewed on short interest.

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