The shares of Ultrapar Participacoes S.A. have decreased by more than -21.12% this year alone. The shares recently went up by 2.69% or $0.14 and now trades at $5.34. The shares of Axovant Gene Therapies Ltd. (NASDAQ:AXGT), has slumped by -28.97% year to date as of 11/22/2019. The shares currently trade at $5.66 and have been able to report a change of 20.43% over the past one week.
The stock of Ultrapar Participacoes S.A. and Axovant Gene Therapies Ltd. were two of the most active stocks on Friday. 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. These figures suggest that UGP ventures generate a higher ROI than that of AXGT.
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 UGP is 3.00 and that of AXGT is 1.40. This implies that it is easier for UGP to cover its immediate obligations over the next 12 months than AXGT. The debt ratio of UGP is 1.72 compared to 2.02 for AXGT. AXGT can be able to settle its long-term debts and thus is a lower financial risk than UGP.Valuation
UGP currently trades at a forward P/E of 21.19, a P/B of 2.51, and a P/S of 0.27 while AXGT trades at a P/B of 7.55, This means that looking at the earnings, book values and sales basis, UGP 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 UGP is currently at a 8.32% to its one-year price target of 4.93. Looking at its rival pricing, AXGT is at a -75.7% relative to its price target of 23.29.
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), UGP is given a 3.00 while 1.80 placed for AXGT. This means that analysts are more bullish on the outlook for UGP 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 UGP is 4.72 while that of AXGT is just 7.83. This means that analysts are more bullish on the forecast for UGP stock.
The stock of Axovant Gene Therapies Ltd. defeats that of Ultrapar Participacoes S.A. when the two are compared, with AXGT taking 4 out of the total factors that were been considered. AXGT 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, AXGT is the cheaper one on an earnings, book value and sales basis. Finally, the sentiment signal for AXGT is better on when it is viewed on short interest.