Earnings

Which Market Offer More Value? – Foamix Pharmaceuticals Ltd. (FOMX), LiqTech International, Inc. (LIQT)

The shares of Foamix Pharmaceuticals Ltd. have increased by more than 4.83% this year alone. The shares recently went up by 3.11% or $0.19 and now trades at $6.30. The shares of LiqTech International, Inc. (NYSE:LIQT), has jumped by 211.51% year to date as of 09/13/2018. The shares currently trade at $1.77 and have been able to report a change of 12.03% over the past one week.

The stock of Foamix Pharmaceuticals Ltd. and LiqTech International, 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. FOMX has an EBITDA margin of 2107.6%, this implies that the underlying business of FOMX is more profitable. The ROI of FOMX is -97.30% while that of LIQT is -62.20%. These figures suggest that LIQT ventures generate a higher ROI than that of FOMX.

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, FOMX’s free cash flow per share is a negative -0.38, while that of LIQT is also a negative -0.01.

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 FOMX is 3.70 and that of LIQT is 3.40. This implies that it is easier for FOMX to cover its immediate obligations over the next 12 months than LIQT. The debt ratio of FOMX is 0.00 compared to 0.00 for LIQT. LIQT can be able to settle its long-term debts and thus is a lower financial risk than FOMX.

Valuation

FOMX currently trades at a P/B of 5.78, and a P/S of 66.47 while LIQT trades at a forward P/E of 59.00, a P/B of 11.06, and a P/S of 11.01. This means that looking at the earnings, book values and sales basis, FOMX 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 FOMX is currently at a -61.59% to its one-year price target of 16.40. Looking at its rival pricing, LIQT is at a 41.6% relative to its price target of 1.25.




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), FOMX is given a 2.00 while 2.00 placed for LIQT. This means that analysts are equally bullish on their outlook for the two stocks 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 FOMX is 2.80 while that of LIQT is just 0.24. This means that analysts are more bullish on the forecast for LIQT stock.

Conclusion

The stock of Foamix Pharmaceuticals Ltd. defeats that of LiqTech International, Inc. when the two are compared, with FOMX taking 5 out of the total factors that were been considered. FOMX 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, FOMX is the cheaper one on an earnings, book value and sales basis. Finally, the sentiment signal for FOMX is better on when it is viewed on short interest.

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