The shares of Fortune Brands Home & Security, Inc. have decreased by more than -35.61% this year alone. The shares recently went down by -3.14% or -$1.43 and now trades at $44.07. The shares of HUYA Inc. (NYSE:HUYA), has jumped by 18.31% year to date as of 11/08/2018. The shares currently trade at $19.00 and have been able to report a change of -2.91% over the past one week.
The stock of Fortune Brands Home & Security, Inc. and HUYA 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.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. FBHS has an EBITDA margin of 14.94%, this implies that the underlying business of FBHS is more profitable. The ROI of FBHS is 12.20% while that of HUYA is -157.60%. These figures suggest that FBHS ventures generate a higher ROI than that of HUYA.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, FBHS’s free cash flow per share is a positive 2.59.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 FBHS is 1.50 and that of HUYA is 6.40. This implies that it is easier for FBHS to cover its immediate obligations over the next 12 months than HUYA. The debt ratio of FBHS is 0.99 compared to 0.00 for HUYA. FBHS can be able to settle its long-term debts and thus is a lower financial risk than HUYA.Valuation
FBHS currently trades at a forward P/E of 11.29, a P/B of 2.94, and a P/S of 1.18 while HUYA trades at a forward P/E of 38.46, a P/B of 5.12, and a P/S of 8.28. This means that looking at the earnings, book values and sales basis, FBHS 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 FBHS is currently at a -17.52% to its one-year price target of 53.43. Looking at its rival pricing, HUYA is at a -32.53% relative to its price target of 28.16.
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), FBHS is given a 2.50 while 2.60 placed for HUYA. This means that analysts are more bullish on the outlook for HUYA 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 FBHS is 2.27 while that of HUYA is just 3.25. This means that analysts are more bullish on the forecast for FBHS stock.
The stock of HUYA Inc. defeats that of Fortune Brands Home & Security, Inc. when the two are compared, with HUYA taking 4 out of the total factors that were been considered. HUYA 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, HUYA is the cheaper one on an earnings, book value and sales basis. Finally, the sentiment signal for HUYA is better on when it is viewed on short interest.