Global Blood Therapeutics, Inc. (NASDAQ:GBT) shares are up more than 18.60% this year and recently increased 2.68% or $1.22 to settle at $46.67. Pilgrim’s Pride Corporation (NASDAQ:PPC), on the other hand, is down -43.11% year to date as of 12/06/2018. It currently trades at $17.67 and has returned -10.53% during the past week.
Global Blood Therapeutics, Inc. (NASDAQ:GBT) and Pilgrim’s Pride Corporation (NASDAQ:PPC) are the two most active stocks based on recent trading volumes. Investors are clearly interested in the two names, but is one a better choice than the other? We will compare the two companies across growth, profitability, risk, valuation, and insider trends to answer this question.Growth
Companies that can consistently grow earnings at a high compound rate usually have the greatest potential to create value for shareholders in the long-run. Analysts expect GBT to grow earnings at a 37.00% annual rate over the next 5 years. Comparatively, PPC is expected to grow at a -3.20% annual rate. All else equal, GBT’s higher growth rate would imply a greater potential for capital appreciation.Cash Flow
Earnings don’t always accurately reflect the amount of cash that a company brings in. GBT’s free cash flow (“FCF”) per share for the trailing twelve months was -0.63. Comparatively, PPC’s free cash flow per share was +0.13.Liquidity and Financial Risk
Analysts look at liquidity and leverage ratios to assess how easily a company can cover its liabilities. GBT has a current ratio of 14.60 compared to 1.70 for PPC. This means that GBT can more easily cover its most immediate liabilities over the next twelve months. GBT’s debt-to-equity ratio is 0.00 versus a D/E of 1.13 for PPC. PPC is therefore the more solvent of the two companies, and has lower financial risk.Valuation
GBT trades at a P/B of 5.15, compared to a forward P/E of 9.70, a P/B of 2.14, and a P/S of 0.40 for PPC. Given that earnings are what matter most to investors, analysts tend to place a greater weight on the P/E.
Analyst Price Targets and Opinions
When investing it’s crucial to distinguish between price and value. As Warren Buffet said, “price is what you pay, value is what you get”. GBT is currently priced at a -43.03% to its one-year price target of 81.92. Comparatively, PPC is -20.87% relative to its price target of 22.33. This suggests that GBT is the better investment over the next year.
Insider Activity and Investor Sentiment
Comparing the number of shares sold short to the float is a method analysts often use to get a reading on investor sentiment. GBT has a short ratio of 8.23 compared to a short interest of 5.68 for PPC. This implies that the market is currently less bearish on the outlook for PPC.Summary
Global Blood Therapeutics, Inc. (NASDAQ:GBT) beats Pilgrim’s Pride Corporation (NASDAQ:PPC) on a total of 8 of the 13 factors compared between the two stocks. GBT is growing fastly, higher liquidity and has lower financial risk. In terms of valuation, GBT is the cheaper of the two stocks on an earnings and sales basis, GBT is more undervalued relative to its price target. Finally, NTB has better sentiment signals based on short interest.