The shares of Companhia Siderurgica Nacional have decreased by more than -2.45% this year alone. The shares recently went down by -1.65% or -$0.04 and now trades at $2.39. The shares of AU Optronics Corp. (NYSE:AUO), has slumped by -9.13% year to date as of 10/11/2018. The shares currently trade at $3.78 and have been able to report a change of -6.67% over the past one week.
The stock of Companhia Siderurgica Nacional and AU Optronics Corp. 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 SID is 7.00% while that of AUO is 8.80%. These figures suggest that AUO ventures generate a higher ROI than that of SID.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, SID’s free cash flow per share is a positive 1.41, while that of AUO is positive 1.11.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 SID is 1.30 and that of AUO is 1.20. This implies that it is easier for SID to cover its immediate obligations over the next 12 months than AUO. The debt ratio of SID is 4.37 compared to 0.47 for AUO. SID can be able to settle its long-term debts and thus is a lower financial risk than AUO.Valuation
SID currently trades at a forward P/E of 9.72, a P/B of 1.82, and a P/S of 0.65 while AUO trades at a P/B of 0.56, and a P/S of 0.36. This means that looking at the earnings, book values and sales basis, SID 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 SID is currently at a -19.26% to its one-year price target of 2.96. Looking at its rival pricing, AUO is at a 11.18% relative to its price target of 3.40.
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), SID is given a 2.30 while 4.00 placed for AUO. This means that analysts are more bullish on the outlook for AUO 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 SID is 1.88 while that of AUO is just 40.93. This means that analysts are more bullish on the forecast for SID stock.
The stock of Companhia Siderurgica Nacional defeats that of AU Optronics Corp. when the two are compared, with SID taking 6 out of the total factors that were been considered. SID 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, SID is the cheaper one on an earnings, book value and sales basis. Finally, the sentiment signal for SID is better on when it is viewed on short interest.