The shares of CenterPoint Energy, Inc. have increased by more than 2.73% this year alone. The shares recently went up by 0.80% or $0.23 and now trades at $29.00. The shares of Unity Biotechnology, Inc. (NASDAQ:UBX), has slumped by -55.41% year to date as of 11/07/2019. The shares currently trade at $7.25 and have been able to report a change of 16.19% over the past one week.
The stock of CenterPoint Energy, Inc. and Unity Biotechnology, 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.
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. CNP has an EBITDA margin of 12.71%, this implies that the underlying business of CNP is more profitable. These figures suggest that CNP ventures generate a higher ROI than that of UBX.
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 CNP is 1.10 and that of UBX is 9.30. This implies that it is easier for CNP to cover its immediate obligations over the next 12 months than UBX. The debt ratio of CNP is 2.36 compared to 0.00 for UBX. CNP can be able to settle its long-term debts and thus is a lower financial risk than UBX.Valuation
CNP currently trades at a forward P/E of 16.42, a P/B of 2.23, and a P/S of 1.26 while UBX trades at a P/B of 2.42, This means that looking at the earnings, book values and sales basis, CNP 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.
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 CNP is currently at a -8.66% to its one-year price target of 31.75. Looking at its rival pricing, UBX is at a -61.84% relative to its price target of 19.00.
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), CNP is given a 2.10 while 2.20 placed for UBX. This means that analysts are more bullish on the outlook for UBX 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 CNP is 3.02 while that of UBX is just 16.38. This means that analysts are more bullish on the forecast for CNP stock.
The stock of CenterPoint Energy, Inc. defeats that of Unity Biotechnology, Inc. when the two are compared, with CNP taking 6 out of the total factors that were been considered. CNP 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, CNP is the cheaper one on an earnings, book value and sales basis. Finally, the sentiment signal for CNP is better on when it is viewed on short interest.