Earnings

Uncovering the next great stocks: National Retail Properties, Inc. (NNN), AVEO Pharmaceuticals, Inc. (AVEO)

The shares of National Retail Properties, Inc. have increased by more than 18.46% this year alone. The shares recently went up by 2.88% or $1.43 and now trades at $51.09. The shares of AVEO Pharmaceuticals, Inc. (NASDAQ:AVEO), has slumped by -27.24% year to date as of 12/06/2018. The shares currently trade at $2.03 and have been able to report a change of -1.93% over the past one week.

The stock of National Retail Properties, Inc. and AVEO 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.

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. NNN has an EBITDA margin of 96.96%, this implies that the underlying business of NNN is more profitable. The ROI of NNN is 5.80% while that of AVEO is 129.70%. These figures suggest that AVEO ventures generate a higher ROI than that of NNN.

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, NNN’s free cash flow per share is a negative -0.01, while that of AVEO is also a negative -0.03.

Valuation



NNN currently trades at a forward P/E of 31.97, a P/B of 2.33, and a P/S of 13.09 while AVEO trades at a P/S of 61.76. This means that looking at the earnings, book values and sales basis, NNN 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 NNN is currently at a 4.71% to its one-year price target of 48.79. Looking at its rival pricing, AVEO is at a -71% relative to its price target of 7.00.

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), NNN is given a 2.10 while 2.00 placed for AVEO. This means that analysts are more bullish on the outlook for NNN 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 NNN is 6.24 while that of AVEO is just 6.99. This means that analysts are more bullish on the forecast for NNN stock.

Conclusion

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

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