Earnings

Taking Tally Of Century Aluminum Company (CENX), Invitae Corporation (NVTA)

The shares of Century Aluminum Company have decreased by more than -42.11% this year alone. The shares recently went down by -4.05% or -$0.48 and now trades at $11.37. The shares of Invitae Corporation (NYSE:NVTA), has jumped by 50.00% year to date as of 09/13/2018. The shares currently trade at $13.62 and have been able to report a change of -3.95% over the past one week.

The stock of Century Aluminum Company and Invitae Corporation 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. CENX has an EBITDA margin of 10.59%, this implies that the underlying business of CENX is more profitable. The ROI of CENX is 7.30% while that of NVTA is -42.50%. These figures suggest that CENX ventures generate a higher ROI than that of NVTA.

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, CENX’s free cash flow per share is a negative -0.44, while that of NVTA is also a negative -0.04.

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 CENX is 2.90 and that of NVTA is 3.80. This implies that it is easier for CENX to cover its immediate obligations over the next 12 months than NVTA. The debt ratio of CENX is 0.30 compared to 0.45 for NVTA. NVTA can be able to settle its long-term debts and thus is a lower financial risk than CENX.

Valuation

CENX currently trades at a forward P/E of 5.82, a P/B of 1.17, and a P/S of 0.59 while NVTA trades at a P/B of 6.68, and a P/S of 8.81. This means that looking at the earnings, book values and sales basis, CENX 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 CENX is currently at a -44.54% to its one-year price target of 20.50. Looking at its rival pricing, NVTA is at a 10.46% relative to its price target of 12.33.




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), CENX is given a 2.40 while 1.80 placed for NVTA. This means that analysts are more bullish on the outlook for CENX 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 CENX is 2.35 while that of NVTA is just 3.81. This means that analysts are more bullish on the forecast for CENX stock.

Conclusion

The stock of Invitae Corporation defeats that of Century Aluminum Company when the two are compared, with NVTA taking 5 out of the total factors that were been considered. NVTA 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, NVTA is the cheaper one on an earnings, book value and sales basis. Finally, the sentiment signal for NVTA is better on when it is viewed on short interest.

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