Palatin Technologies, Inc. (NYSE:PTN), on the other hand, is up 22.25% year to date as of 09/11/2018. It currently trades at $1.05 and has returned 2.94% during the past week.
Diebold Nixdorf, Incorporated (NYSE:DBD) and Palatin Technologies, Inc. (NYSE:PTN) are the two most active stocks in the Diversified Computer Systems industry based on today’s trading volumes. We will compare the two companies based on the strength of various metrics, including growth, profitability, risk, return, and valuation to determine if one is a better investment than the other.Growth
Companies that can consistently grow earnings at a high compound rate usually have the greatest potential to create value for shareholders in the long-run. Analysts expect DBD to grow earnings at a 7.00% annual rate over the next 5 years.Profitability and Returns
A high growth rate isn’t necessarily valuable to investors. In fact, companies that overinvest in low return projects just to achieve a high growth rate can actually destroy shareholder value. Profitability and returns are a measure of the quality of a company’s business and its growth opportunities. We’ll use EBITDA margin and Return on Investment (ROI) to measure this., compared to an EBITDA margin of 35.4% for Palatin Technologies, Inc. (PTN). DBD’s ROI is -1.40% while PTN has a ROI of -124.40%. The interpretation is that DBD’s business generates a higher return on investment than PTN’s.Cash Flow
The value of a stock is simply the present value of its future free cash flows. DBD’s free cash flow (“FCF”) per share for the trailing twelve months was -1.64. Comparatively, PTN’s free cash flow per share was -0.04. On a percent-of-sales basis, DBD’s free cash flow was -2.71% while PTN converted -0.02% of its revenues into cash flow. This means that, for a given level of sales, PTN is able to generate more free cash flow for investors.Liquidity and Financial Risk
Liquidity and leverage ratios provide insight into the financial health of a company, and allow investors to determine the likelihood that the company will be able to continue operating as a going concern. DBD has a current ratio of 1.40 compared to 1.90 for PTN. This means that PTN can more easily cover its most immediate liabilities over the next twelve months. DBD’s debt-to-equity ratio is 8.30 versus a D/E of 0.80 for PTN. DBD is therefore the more solvent of the two companies, and has lower financial risk.Valuation
DBD trades at a forward P/E of 17.95, a P/B of 1.64, and a P/S of 0.08, compared to a forward P/E of 38.89, a P/B of 21.00, and a P/S of 2.52 for PTN. DBD is the cheaper of the two stocks on an earnings, book value and sales basis. Given that earnings are what matter most to investors, analysts tend to place a greater weight on the P/E.
Analyst Price Targets and Opinions
Investors often compare a stock’s current price to an analyst price target to get a sense of the potential upside within the next year. DBD is currently priced at a -56.75% to its one-year price target of 11.33. Comparatively, PTN is -77.52% relative to its price target of 4.67. This suggests that PTN is the better investment over the next year.
Risk and Volatility
Beta is a metric that investors frequently use to analyze a stock’s systematic risk. A beta above 1 implies above average market volatility. Conversely, a stock with a beta below 1 is seen as less risky than the overall market. DBD has a beta of 1.67 and PTN’s beta is 1.64. PTN’s shares are therefore the less volatile of the two stocks.Insider Activity and Investor Sentiment
The analysis of insider buying and selling trends can be extended to the aggregate level. Short interest, which represents the percentage of a stock’s tradable shares currently being shorted, captures what the market as a whole feels about a stock. DBD has a short ratio of 7.53 compared to a short interest of 9.68 for PTN. This implies that the market is currently less bearish on the outlook for DBD.Summary
Palatin Technologies, Inc. (NYSE:PTN) beats Diebold Nixdorf, Incorporated (NYSE:DBD) on a total of 8 of the 14 factors compared between the two stocks. PTN is growing fastly, has higher cash flow per share, has a higher cash conversion rate, higher liquidity and has lower financial risk. In terms of valuation, DBD is the cheaper of the two stocks on an earnings, book value and sales basis, PTN is more undervalued relative to its price target. Finally, MWA has better sentiment signals based on short interest.