The shares of Gogo Inc. have increased by more than 62.21% this year alone. The shares recently went up by 4.75% or $0.22 and now trades at $4.85. The shares of First Solar, Inc. (NASDAQ:FSLR), has jumped by 43.54% year to date as of 08/12/2019. The shares currently trade at $60.94 and have been able to report a change of -1.73% over the past one week.
The stock of Gogo Inc. and First Solar, Inc. 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.
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 GOGO will grow it’s earning at a 10.00% annual rate in the next 5 years. This is in contrast to FSLR which will have a positive growth at a 23.61% annual rate. This means that the higher growth rate of FSLR implies a greater potential for capital appreciation over the years.
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. GOGO has an EBITDA margin of 7.58%, this implies that the underlying business of FSLR is more profitable. The ROI of GOGO is -6.20% while that of FSLR is 0.50%. These figures suggest that FSLR ventures generate a higher ROI than that of GOGO.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, GOGO’s free cash flow per share is a positive 0, while that of FSLR is negative -7.37.
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 GOGO is 1.80 and that of FSLR is 4.00. This implies that it is easier for GOGO to cover its immediate obligations over the next 12 months than FSLR.Valuation
GOGO currently trades at a P/S of 0.49 while FSLR trades at a forward P/E of 16.72, a P/B of 1.25, and a P/S of 2.64. This means that looking at the earnings, book values and sales basis, GOGO 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 GOGO is currently at a -22.4% to its one-year price target of 6.25. Looking at its rival pricing, FSLR is at a -20.95% relative to its price target of 77.09.
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), GOGO is given a 2.60 while 2.10 placed for FSLR. This means that analysts are more bullish on the outlook for GOGO 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 GOGO is 22.79 while that of FSLR is just 9.83. This means that analysts are more bullish on the forecast for FSLR stock.
The stock of First Solar, Inc. defeats that of Gogo Inc. when the two are compared, with FSLR taking 6 out of the total factors that were been considered. FSLR 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, FSLR is the cheaper one on an earnings, book value and sales basis. Finally, the sentiment signal for FSLR is better on when it is viewed on short interest.