Earnings

Arrowhead Pharmaceuticals, Inc. (ARWR) is better stock pick than World Wrestling Entertainment, Inc. (WWE)

The shares of World Wrestling Entertainment, Inc. have increased by more than 150.39% this year alone. The shares recently went up by 7.00% or $5.01 and now trades at $76.57. The shares of Arrowhead Pharmaceuticals, Inc. (NASDAQ:ARWR), has jumped by 270.38% year to date as of 12/06/2018. The shares currently trade at $13.63 and have been able to report a change of -7.91% over the past one week.

The stock of World Wrestling Entertainment, Inc. and Arrowhead Pharmaceuticals, 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: 71.10% versus 7.33%

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 WWE will grow it’s earning at a 71.10% annual rate in the next 5 years. This is in contrast to ARWR which will have a positive growth at a 7.33% annual rate. This means that the higher growth rate of WWE 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. WWE has an EBITDA margin of 15.03%, this implies that the underlying business of WWE is more profitable. The ROI of WWE is 11.90% while that of ARWR is -44.10%. These figures suggest that WWE ventures generate a higher ROI than that of ARWR.

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, WWE’s free cash flow per share is a positive 0, while that of ARWR is negative -0.05.

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 WWE is 1.30 and that of ARWR is 8.70. This implies that it is easier for WWE to cover its immediate obligations over the next 12 months than ARWR. The debt ratio of WWE is 0.77 compared to 0.02 for ARWR. WWE can be able to settle its long-term debts and thus is a lower financial risk than ARWR.

Valuation

WWE currently trades at a forward P/E of 60.20, a P/B of 21.33, and a P/S of 6.70 while ARWR trades at a P/B of 11.65, and a P/S of 88.77. This means that looking at the earnings, book values and sales basis, WWE 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 WWE is currently at a -13.75% to its one-year price target of 88.78. Looking at its rival pricing, ARWR is at a -41.5% relative to its price target of 23.30.

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), WWE is given a 2.20 while 1.70 placed for ARWR. This means that analysts are more bullish on the outlook for WWE 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 WWE is 5.38 while that of ARWR is just 6.28. This means that analysts are more bullish on the forecast for WWE stock.

Conclusion

The stock of Arrowhead Pharmaceuticals, Inc. defeats that of World Wrestling Entertainment, Inc. when the two are compared, with ARWR taking 6 out of the total factors that were been considered. ARWR 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, ARWR is the cheaper one on an earnings, book value and sales basis. Finally, the sentiment signal for ARWR is better on when it is viewed on short interest.

Previous ArticleNext Article

Related Post

Set Sail With nLIGHT, Inc. (LASR), Belmond Ltd. (B... The shares of nLIGHT, Inc. have decreased by more than -24.49% this year alone. The shares recently went up by 6.49% or $1.24 and now trades at $20.35...
Should You Buy Old Republic International Corporat... Old Republic International Corporation (NYSE:ORI) shares are up more than 6.19% this year and recently increased 0.84% or $0.18 to settle at $21.61. P...
Comparing Top Moving Stocks Entergy Corporation (E... The shares of Entergy Corporation have increased by more than 9.33% this year alone. The shares recently went up by 1.33% or $1.17 and now trades at $...
Are These Stocks A Sure Bet? – CDW Corporati... The shares of CDW Corporation have increased by more than 27.74% this year alone. The shares recently went down by -1.09% or -$0.98 and now trades at ...
Set Sail With Anadarko Petroleum Corporation (APC)... The shares of Anadarko Petroleum Corporation have decreased by more than -2.95% this year alone. The shares recently went up by 0.91% or $0.47 and now...