CBL & Associates Properties, Inc (NYSE:CBL) shares are down more than -22.79% this year and recently decreased -0.23% or -$0.01 to settle at $4.37. Alliance MMA, Inc. (NASDAQ:AMMA), on the other hand, is down -69.05% year to date as of 09/11/2018. It currently trades at $0.36 and has returned 31.74% during the past week.
CBL & Associates Properties, Inc (NYSE:CBL) and Alliance MMA, Inc. (NASDAQ:AMMA) are the two most active stocks in the REIT – Retail 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
The ability to grow earnings at a compound rate over time is a crucial determinant of investment value. Analysts expect CBL to grow earnings at a 4.90% annual rate over the next 5 years.Profitability and Returns
Just, if not more, important than the growth rate is the quality of that growth. Growth can actual be harmful to investors if it comes at the cost of weak profitability and low returns. To adjust for differences in capital structure we’ll use EBITDA margin and Return on Investment (ROI) as measures of profitability and return. CBL & Associates Properties, Inc (CBL) has an EBITDA margin of 59.25%. This suggests that CBL underlying business is more profitable CBL’s ROI is 5.00% while AMMA has a ROI of -125.30%. The interpretation is that CBL’s business generates a higher return on investment than AMMA’s.Cash Flow
The amount of free cash flow available to investors is ultimately what determines the value of a stock. CBL’s free cash flow (“FCF”) per share for the trailing twelve months was +0.37. Comparatively, AMMA’s free cash flow per share was -0.13. On a percent-of-sales basis, CBL’s free cash flow was 0.01% while AMMA converted -0.05% of its revenues into cash flow. This means that, for a given level of sales, CBL is able to generate more free cash flow for investors.Valuation
CBL trades at a P/B of 0.69, and a P/S of 0.84, compared to a P/S of 1.25 for AMMA. CBL is the cheaper of the two stocks on sales basis but is expensive in terms of P/E and P/B ratio. 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
Just because a stock is cheaper doesn’t mean there’s more value to be had. In order to assess value we need to compare the current price to where it’s likely to trade in the future. CBL is currently priced at a 11.76% to its one-year price target of 3.91.
Insider Activity and Investor Sentiment
Analysts often look at short interest, or the percentage of a company’s float currently being shorted by investors, to aid in their outlook for a particular stock. CBL has a short ratio of 13.58 compared to a short interest of 0.33 for AMMA. This implies that the market is currently less bearish on the outlook for AMMA.Summary
Alliance MMA, Inc. (NASDAQ:AMMA) beats CBL & Associates Properties, Inc (NYSE:CBL) on a total of 6 of the 13 factors compared between the two stocks. AMMA is growing fastly and has lower financial risk. Finally, AMMA has better sentiment signals based on short interest.