The shares of Gentex Corporation have decreased by more than -7.97% this year alone. The shares recently went down by -1.28% or -$0.25 and now trades at $19.28. The shares of Baozun Inc. (NASDAQ:BZUN), has jumped by 16.86% year to date as of 10/11/2018. The shares currently trade at $36.88 and have been able to report a change of -12.85% over the past one week.
The stock of Gentex Corporation and Baozun 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.Next 5Y EPS Growth: 15.00% versus 7.93%
When a company is able to grow consistently in terms of earnings at a high compound rate have the highest likelihood of creating value for its shareholders over time. Analysts have predicted that GNTX will grow it’s earning at a 15.00% annual rate in the next 5 years. This is in contrast to BZUN which will have a positive growth at a 7.93% annual rate. This means that the higher growth rate of GNTX implies a greater potential for capital appreciation over the years.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. GNTX has an EBITDA margin of 35.18%, this implies that the underlying business of GNTX is more profitable. The ROI of GNTX is 20.50% while that of BZUN is 9.70%. These figures suggest that GNTX ventures generate a higher ROI than that of BZUN.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, GNTX’s free cash flow per share is a positive 4.95.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 GNTX is 4.40 and that of BZUN is 2.10. This implies that it is easier for GNTX to cover its immediate obligations over the next 12 months than BZUN. The debt ratio of GNTX is 0.01 compared to 0.27 for BZUN. BZUN can be able to settle its long-term debts and thus is a lower financial risk than GNTX.Valuation
GNTX currently trades at a forward P/E of 10.71, a P/B of 2.73, and a P/S of 2.93 while BZUN trades at a forward P/E of 21.28, a P/B of 7.54, and a P/S of 3.26. This means that looking at the earnings, book values and sales basis, GNTX 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 GNTX is currently at a -15.14% to its one-year price target of 22.72. Looking at its rival pricing, BZUN is at a -38.62% relative to its price target of 60.08.
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), GNTX is given a 2.80 while 2.00 placed for BZUN. This means that analysts are more bullish on the outlook for GNTX stocks.
The stock of Baozun Inc. defeats that of Gentex Corporation when the two are compared, with BZUN taking 3 out of the total factors that were been considered. BZUN 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, BZUN is the cheaper one on an earnings, book value and sales basis. Finally, the sentiment signal for BZUN is better on when it is viewed on short interest.