The shares of Gastar Exploration Inc. have decreased by more than -83.90% this year alone. The shares of Jack in the Box Inc. (NASDAQ:JACK), has slumped by -5.45% year to date as of 08/09/2018. The shares currently trade at $92.76 and have been able to report a change of 8.17% over the past one week.
The stock of Gastar Exploration Inc. and Jack in the Box Inc. 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: 4.00% versus 13.85%
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 GST will grow it’s earning at a 4.00% annual rate in the next 5 years. This is in contrast to JACK which will have a positive growth at a 13.85% annual rate. This means that the higher growth rate of JACK 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. GST has an EBITDA margin of 44.73%, this implies that the underlying business of GST is more profitable. The ROI of GST is -2.60% while that of JACK is 24.40%. These figures suggest that JACK ventures generate a higher ROI than that of GST.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, GST’s free cash flow per share is a negative -0.02, while that of JACK is also a negative -2.98.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 GST is 1.90 and that of JACK is 0.90. This implies that it is easier for GST to cover its immediate obligations over the next 12 months than JACK.Valuation
GST currently trades at a P/S of 0.54 while JACK trades at a forward P/E of 19.77, and a P/S of 2.19. This means that looking at the earnings, book values and sales basis, GST 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. Looking at its rival pricing, JACK is at a -5.07% relative to its price target of 97.71.
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), GST is given a 2.60 while 2.20 placed for JACK. This means that analysts are more bullish on the outlook for GST 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 GST is 2.25 while that of JACK is just 3.53. This means that analysts are more bullish on the forecast for GST stock.
The stock of Jack in the Box Inc. defeats that of Gastar Exploration Inc. when the two are compared, with JACK taking 5 out of the total factors that were been considered. JACK 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, JACK is the cheaper one on an earnings, book value and sales basis. Finally, the sentiment signal for JACK is better on when it is viewed on short interest.