Earnings

Comparing Top Moving Stocks Bausch Health Companies Inc. (BHC), Pentair plc (PNR)

The shares of Bausch Health Companies Inc. have increased by more than 21.66% this year alone. The shares recently went up by 3.82% or $0.93 and now trades at $25.28. The shares of Pentair plc (NYSE:PNR), has slumped by -10.38% year to date as of 12/03/2018. The shares currently trade at $42.50 and have been able to report a change of 1.75% over the past one week.

The stock of Bausch Health Companies Inc. and Pentair plc were two of the most active stocks on Monday. 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. The ROI of BHC is 9.80% while that of PNR is 9.80%. These figures suggest that BHC ventures generate a higher ROI than that of PNR.

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, BHC’s free cash flow per share is a positive 5.45, while that of PNR is positive 1.37.

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 BHC is 1.10 and that of PNR is 1.40. This implies that it is easier for BHC to cover its immediate obligations over the next 12 months than PNR. The debt ratio of BHC is 7.84 compared to 0.00 for PNR. BHC can be able to settle its long-term debts and thus is a lower financial risk than PNR.

Valuation

BHC currently trades at a forward P/E of 6.67, a P/B of 2.82, and a P/S of 1.06 while PNR trades at a forward P/E of 16.69, a P/B of 3.94, and a P/S of 2.11. This means that looking at the earnings, book values and sales basis, BHC 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 BHC is currently at a -7.37% to its one-year price target of 27.29. Looking at its rival pricing, PNR is at a -5.56% relative to its price target of 45.00.




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), BHC is given a 2.80 while 2.80 placed for PNR. This means that analysts are equally bullish on their outlook for the two stocks 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 BHC is 2.57 while that of PNR is just 2.21. This means that analysts are more bullish on the forecast for PNR stock.

Conclusion

The stock of Pentair plc defeats that of Bausch Health Companies Inc. when the two are compared, with PNR taking 4 out of the total factors that were been considered. PNR 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, PNR is the cheaper one on an earnings, book value and sales basis. Finally, the sentiment signal for PNR is better on when it is viewed on short interest.

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