Earnings

Reliable Long-term Trend to Profit From: USA Technologies, Inc. (USAT), India Globalization Capital, Inc. (IGC)

The shares of USA Technologies, Inc. have increased by more than 11.79% this year alone. The shares recently went up by 7.39% or $0.75 and now trades at $10.90. The shares of India Globalization Capital, Inc. (NYSE:IGC), has jumped by 16.00% year to date as of 09/13/2018. The shares currently trade at $1.16 and have been able to report a change of -15.94% over the past one week.

The stock of USA Technologies, Inc. and India Globalization Capital, 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.

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. USAT has an EBITDA margin of 4.87%, this implies that the underlying business of USAT is more profitable. The ROI of USAT is 0.10% while that of IGC is -17.40%. These figures suggest that USAT ventures generate a higher ROI than that of IGC.

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, USAT’s free cash flow per share is a positive 0, while that of IGC is negative -0.03.

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 USAT is 1.30 and that of IGC is 1.10. This implies that it is easier for USAT to cover its immediate obligations over the next 12 months than IGC. The debt ratio of USAT is 0.33 compared to 0.26 for IGC. USAT can be able to settle its long-term debts and thus is a lower financial risk than IGC.

Valuation

USAT currently trades at a forward P/E of 87.90, a P/B of 5.19, and a P/S of 4.85 while IGC trades at a P/B of 4.83, and a P/S of 11.40. This means that looking at the earnings, book values and sales basis, USAT 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 USAT is currently at a -29.68% to its one-year price target of 15.50.

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 USAT is 6.16 while that of IGC is just 0.08. This means that analysts are more bullish on the forecast for IGC stock.

Conclusion

The stock of India Globalization Capital, Inc. defeats that of USA Technologies, Inc. when the two are compared, with IGC taking 5 out of the total factors that were been considered. IGC 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, IGC is the cheaper one on an earnings, book value and sales basis. Finally, the sentiment signal for IGC is better on when it is viewed on short interest.

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