The shares of MetLife, Inc. have increased by more than 15.49% this year alone. The shares recently went up by 2.20% or $1.02 and now trades at $47.42. The shares of CF Industries Holdings, Inc. (NYSE:CF), has jumped by 16.71% year to date as of 09/10/2019. The shares currently trade at $50.78 and have been able to report a change of 7.47% over the past one week.
The stock of MetLife, Inc. and CF Industries Holdings, Inc. were two of the most active stocks on Tuesday. 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.
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. MET has an EBITDA margin of 12.5%, this implies that the underlying business of CF is more profitable. The ROI of MET is 9.10% while that of CF is 8.70%. These figures suggest that MET ventures generate a higher ROI than that of CF.
The value of a stock is ultimately determined by the amount of cash flow that the investors have available. Over the last 12 months, MET’s free cash flow per share is a positive 2.77, while that of CF is positive 5.47.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 MET is 0.26 compared to 1.53 for CF. CF can be able to settle its long-term debts and thus is a lower financial risk than MET.
MET currently trades at a forward P/E of 7.77, a P/B of 0.70, and a P/S of 0.67 while CF trades at a forward P/E of 17.42, a P/B of 3.66, and a P/S of 2.40. This means that looking at the earnings, book values and sales basis, MET 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 MET is currently at a -10.12% to its one-year price target of 52.76. Looking at its rival pricing, CF is at a -6.15% relative to its price target of 54.11.
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), MET is given a 2.40 while 2.40 placed for CF. This means that analysts are equally bullish on their outlook for the two stocks 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 MET is 2.54 while that of CF is just 1.55. This means that analysts are more bullish on the forecast for CF stock.
The stock of CF Industries Holdings, Inc. defeats that of MetLife, Inc. when the two are compared, with CF taking 5 out of the total factors that were been considered. CF 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, CF is the cheaper one on an earnings, book value and sales basis. Finally, the sentiment signal for CF is better on when it is viewed on short interest.