Earnings

Which of these 2 stocks can turn out to be absolute gem? – GNC Holdings, Inc. (GNC), Sonos, Inc. (SONO)

The shares of GNC Holdings, Inc. have decreased by more than -1.08% this year alone. The shares recently went up by 26.30% or $0.76 and now trades at $3.65. The shares of Sonos, Inc. (NASDAQ:SONO), has slumped by -16.02% year to date as of 09/13/2018. The shares currently trade at $16.72 and have been able to report a change of -8.18% over the past one week.

The stock of GNC Holdings, Inc. and Sonos, 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. The ROI of GNC is -15.80% while that of SONO is -33.50%. These figures suggest that GNC ventures generate a higher ROI than that of SONO.

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, GNC’s free cash flow per share is a positive 0.79, while that of SONO 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 GNC is 1.50 and that of SONO is 1.90. This implies that it is easier for GNC to cover its immediate obligations over the next 12 months than SONO.

Valuation

GNC currently trades at a forward P/E of 9.29, and a P/S of 0.13 while SONO trades at a P/B of 27.73, and a P/S of 1.46. This means that looking at the earnings, book values and sales basis, GNC 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 GNC is currently at a 21.67% to its one-year price target of 3.00. Looking at its rival pricing, SONO is at a -26.76% relative to its price target of 22.83.




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), GNC is given a 3.30 while 2.50 placed for SONO. This means that analysts are more bullish on the outlook for GNC 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 GNC is 15.21 while that of SONO is just 0.72. This means that analysts are more bullish on the forecast for SONO stock.

Conclusion

The stock of GNC Holdings, Inc. defeats that of Sonos, Inc. when the two are compared, with GNC taking 6 out of the total factors that were been considered. GNC 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, GNC is the cheaper one on an earnings, book value and sales basis. Finally, the sentiment signal for GNC is better on when it is viewed on short interest.

Previous ArticleNext Article

Related Post

Comparing Top Moving Stocks Werner Enterprises, In... The shares of Werner Enterprises, Inc. have decreased by more than -6.34% this year alone. The shares recently went down by -0.14% or -$0.05 and now t...
Comparing Top Moving Stocks Agenus Inc. (AGEN), En... The shares of Agenus Inc. have decreased by more than -46.32% this year alone. The shares recently went down by -3.31% or -$0.06 and now trades at $1....
NiSource Inc. (NI) is better stock pick than STMic... The shares of NiSource Inc. have increased by more than 0.47% this year alone. The shares recently went up by 0.19% or $0.05 and now trades at $25.79....
Comparing Top Moving Stocks HP Inc. (HPQ), Equinor... The shares of HP Inc. have increased by more than 9.76% this year alone. The shares recently went down by -3.39% or -$0.81 and now trades at $23.06. T...
A Comparison of Top Movers: Nabors Industries Ltd.... The shares of Nabors Industries Ltd. have decreased by more than -7.61% this year alone. The shares recently went up by 1.61% or $0.1 and now trades a...