Earnings

Set Sail With HD Supply Holdings, Inc. (HDS), Medical Properties Trust, Inc. (MPW)

The shares of HD Supply Holdings, Inc. have decreased by more than -5.00% this year alone. The shares recently went down by -3.67% or -$1.45 and now trades at $38.03. The shares of Medical Properties Trust, Inc. (NYSE:MPW), has jumped by 2.39% year to date as of 10/11/2018. The shares currently trade at $14.11 and have been able to report a change of -0.14% over the past one week.

The stock of HD Supply Holdings, Inc. and Medical Properties Trust, 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: 12.10% versus 6.21%

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 HDS will grow it’s earning at a 12.10% annual rate in the next 5 years. This is in contrast to MPW which will have a positive growth at a 6.21% annual rate. This means that the higher growth rate of HDS 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. HDS has an EBITDA margin of 13.02%, this implies that the underlying business of MPW is more profitable. The ROI of HDS is 11.00% while that of MPW is 5.50%. These figures suggest that HDS ventures generate a higher ROI than that of MPW.

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, HDS’s free cash flow per share is a positive 2.12.

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 debt ratio of HDS is 1.30 compared to 1.27 for MPW. HDS can be able to settle its long-term debts and thus is a lower financial risk than MPW.

Valuation

HDS currently trades at a forward P/E of 11.52, a P/B of 4.33, and a P/S of 1.27 while MPW trades at a forward P/E of 13.19, a P/B of 1.34, and a P/S of 6.53. This means that looking at the earnings, book values and sales basis, HDS 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 HDS is currently at a -22.91% to its one-year price target of 49.33. Looking at its rival pricing, MPW is at a -1.47% relative to its price target of 14.32.

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), HDS is given a 1.90 while 3.00 placed for MPW. This means that analysts are more bullish on the outlook for MPW 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 HDS is 1.79 while that of MPW is just 10.24. This means that analysts are more bullish on the forecast for HDS stock.

Conclusion

The stock of Medical Properties Trust, Inc. defeats that of HD Supply Holdings, Inc. when the two are compared, with MPW taking 4 out of the total factors that were been considered. MPW 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, MPW is the cheaper one on an earnings, book value and sales basis. Finally, the sentiment signal for MPW is better on when it is viewed on short interest.

Previous ArticleNext Article

Related Post

A Comparison of Top Movers: Acorda Therapeutics, I... The shares of Acorda Therapeutics, Inc. have decreased by more than -22.28% this year alone. The shares recently went up by 1.89% or $0.31 and now tra...
Reliable Long-term Trend to Profit From: DowDuPont... The shares of DowDuPont Inc. have decreased by more than -1.67% this year alone. The shares recently went up by 1.89% or $1.3 and now trades at $70.03...
Comparing Valuation And Performance: Campbell Soup... The shares of Campbell Soup Company have decreased by more than -13.18% this year alone. The shares recently went down by -2.13% or -$0.91 and now tra...
Financially Devastating or Fantastic? – Ante... The shares of Antero Resources Corporation have decreased by more than -2.95% this year alone. The shares recently went up by 1.88% or $0.34 and now t...
A Comparison of Top Movers: Teekay Tankers Ltd. (T... The shares of Teekay Tankers Ltd. have decreased by more than -21.43% this year alone. The shares recently went up by 2.80% or $0.03 and now trades at...