Earnings

Set Sail With Huazhu Group Limited (HTHT), Scientific Games Corporation (SGMS)

The shares of Huazhu Group Limited have decreased by more than -26.11% this year alone. The shares recently went up by 2.10% or $0.55 and now trades at $26.68. The shares of Scientific Games Corporation (NASDAQ:SGMS), has slumped by -53.72% year to date as of 10/11/2018. The shares currently trade at $23.74 and have been able to report a change of -4.70% over the past one week.

The stock of Huazhu Group Limited and Scientific Games Corporation 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. HTHT has an EBITDA margin of 9.13%, this implies that the underlying business of SGMS is more profitable. The ROI of HTHT is 9.40% while that of SGMS is 4.90%. These figures suggest that HTHT ventures generate a higher ROI than that of SGMS.

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, HTHT’s free cash flow per share is a positive 3.02, while that of SGMS is positive 0.39.

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 HTHT is 1.50 and that of SGMS is 1.90. This implies that it is easier for HTHT to cover its immediate obligations over the next 12 months than SGMS.

Valuation

HTHT currently trades at a forward P/E of 22.86, a P/B of 31.02, and a P/S of 5.95 while SGMS trades at a forward P/E of 34.76, and a P/S of 0.71. This means that looking at the earnings, book values and sales basis, HTHT 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 HTHT is currently at a -37.94% to its one-year price target of 42.99. Looking at its rival pricing, SGMS is at a -47.89% relative to its price target of 45.56.




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), HTHT is given a 1.90 while 2.50 placed for SGMS. This means that analysts are more bullish on the outlook for SGMS 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 HTHT is 5.15 while that of SGMS is just 4.35. This means that analysts are more bullish on the forecast for SGMS stock.

Conclusion

The stock of Huazhu Group Limited defeats that of Scientific Games Corporation when the two are compared, with HTHT taking 6 out of the total factors that were been considered. HTHT 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, HTHT is the cheaper one on an earnings, book value and sales basis. Finally, the sentiment signal for HTHT is better on when it is viewed on short interest.

Previous ArticleNext Article

Related Post

Reliable Long-term Trend to Profit From: TrovaGene... The shares of TrovaGene, Inc. have decreased by more than -71.54% this year alone. The shares recently went up by 3.96% or $0.04 and now trades at $1....
Uncovering the next great stocks: Cenovus Energy I... The shares of Cenovus Energy Inc. have increased by more than 8.43% this year alone. The shares recently went up by 0.92% or $0.09 and now trades at $...
Are These Stocks A Sure Bet? – BioScrip, Inc... The shares of BioScrip, Inc. have increased by more than 6.19% this year alone. The shares recently went down by -2.52% or -$0.08 and now trades at $3...
Comparing Top Moving Stocks Honeywell Internationa... The shares of Honeywell International Inc. have increased by more than 4.39% this year alone. The shares recently went up by 0.47% or $0.75 and now tr...
Which of these 2 stocks can turn out to be absolut... The shares of National Retail Properties, Inc. have increased by more than 4.50% this year alone. The shares recently went up by 2.60% or $1.14 and no...