The shares of Nautilus, Inc. have decreased by more than -84.86% this year alone. The shares recently went down by -5.17% or -$0.09 and now trades at $1.65. The shares of O’Reilly Automotive, Inc. (NASDAQ:ORLY), has jumped by 14.40% year to date as of 09/12/2019. The shares currently trade at $393.90 and have been able to report a change of -0.68% over the past one week.
The stock of Nautilus, Inc. and O’Reilly Automotive, 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.
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 NLS will grow it’s earning at a 10.00% annual rate in the next 5 years. This is in contrast to ORLY which will have a positive growth at a 14.85% annual rate. This means that the higher growth rate of ORLY 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. The ROI of NLS is 6.70% while that of ORLY is 38.30%. These figures suggest that ORLY ventures generate a higher ROI than that of NLS.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, NLS’s free cash flow per share is a positive -0, while that of ORLY is positive 2.7.
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 NLS is 2.10 and that of ORLY is 0.80. This implies that it is easier for NLS to cover its immediate obligations over the next 12 months than ORLY. The debt ratio of NLS is 0.22 compared to 26.15 for ORLY. ORLY can be able to settle its long-term debts and thus is a lower financial risk than NLS.Valuation
NLS currently trades at a P/B of 0.52, and a P/S of 0.14 while ORLY trades at a forward P/E of 20.11, a P/B of 211.77, and a P/S of 3.05. This means that looking at the earnings, book values and sales basis, NLS 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 NLS is currently at a -36.05% to its one-year price target of 2.58. Looking at its rival pricing, ORLY is at a -6.17% relative to its price target of 419.80.
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), NLS is given a 2.80 while 2.10 placed for ORLY. This means that analysts are more bullish on the outlook for NLS 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 NLS is 3.11 while that of ORLY is just 2.69. This means that analysts are more bullish on the forecast for ORLY stock.
The stock of Nautilus, Inc. defeats that of O’Reilly Automotive, Inc. when the two are compared, with NLS taking 6 out of the total factors that were been considered. NLS 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, NLS is the cheaper one on an earnings, book value and sales basis. Finally, the sentiment signal for NLS is better on when it is viewed on short interest.