Which of these 2 stocks can turn out to be absolute gem? – StoneCo Ltd. (STNE), Illumina, Inc. (ILMN)

The shares of StoneCo Ltd. have decreased by more than -30.88% this year alone. The shares recently went down by -1.90% or -$0.42 and now trades at $21.67. The shares of Illumina, Inc. (NASDAQ:ILMN), has jumped by 53.01% year to date as of 12/06/2018. The shares currently trade at $334.32 and have been able to report a change of 0.00% over the past one week.

The stock of StoneCo Ltd. and Illumina, 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. The ROI of STNE is -12.00% while that of ILMN is 9.90%. These figures suggest that ILMN ventures generate a higher ROI than that of STNE.

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, STNE’s free cash flow per share is a positive 0, while that of ILMN is positive 8.17.

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 debt ratio of STNE is 0.00 compared to 0.56 for ILMN. ILMN can be able to settle its long-term debts and thus is a lower financial risk than STNE.


STNE currently trades at a P/B of 25.64, and a P/S of 77.09 while ILMN trades at a forward P/E of 52.38, a P/B of 14.03, and a P/S of 15.18. This means that looking at the earnings, book values and sales basis, ILMN 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. Looking at its rival pricing, ILMN is at a -7.07% relative to its price target of 359.75.

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 STNE is 2.06 while that of ILMN is just 2.36. This means that analysts are more bullish on the forecast for STNE stock.


The stock of StoneCo Ltd. defeats that of Illumina, Inc. when the two are compared, with STNE taking 5 out of the total factors that were been considered. STNE 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, STNE is the cheaper one on an earnings, book value and sales basis. Finally, the sentiment signal for STNE is better on when it is viewed on short interest.

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