The shares of Okta, Inc. have increased by more than 140.10% this year alone. The shares recently went down by -1.77% or -$1.11 and now trades at $61.49. The shares of Axalta Coating Systems Ltd. (NYSE:AXTA), has slumped by -20.49% year to date as of 11/08/2018. The shares currently trade at $25.73 and have been able to report a change of 1.06% over the past one week.
The stock of Okta, Inc. and Axalta Coating Systems Ltd. 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: 20.00% versus 11.51%
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 OKTA will grow it’s earning at a 20.00% annual rate in the next 5 years. This is in contrast to AXTA which will have a positive growth at a 11.51% annual rate. This means that the higher growth rate of OKTA 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. The ROI of OKTA is -58.20% while that of AXTA is 5.90%. These figures suggest that AXTA ventures generate a higher ROI than that of OKTA.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, OKTA’s free cash flow per share is a positive -0, while that of AXTA is positive 2.07.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 OKTA is 2.90 and that of AXTA is 2.20. This implies that it is easier for OKTA to cover its immediate obligations over the next 12 months than AXTA. The debt ratio of OKTA is 1.08 compared to 3.13 for AXTA. AXTA can be able to settle its long-term debts and thus is a lower financial risk than OKTA.Valuation
OKTA currently trades at a P/B of 26.73, and a P/S of 21.48 while AXTA trades at a forward P/E of 18.06, a P/B of 4.94, and a P/S of 1.32. This means that looking at the earnings, book values and sales basis, AXTA 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 OKTA is currently at a -19.66% to its one-year price target of 76.54. Looking at its rival pricing, AXTA is at a -15.17% relative to its price target of 30.33.
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), OKTA is given a 1.90 while 2.40 placed for AXTA. This means that analysts are more bullish on the outlook for AXTA 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 OKTA is 3.10 while that of AXTA is just 2.29. This means that analysts are more bullish on the forecast for AXTA stock.
The stock of Okta, Inc. defeats that of Axalta Coating Systems Ltd. when the two are compared, with OKTA taking 7 out of the total factors that were been considered. OKTA 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, OKTA is the cheaper one on an earnings, book value and sales basis. Finally, the sentiment signal for OKTA is better on when it is viewed on short interest.