The shares of Mattel, Inc. have increased by more than 17.12% this year alone. The shares recently went down by -0.93% or -$0.11 and now trades at $11.70. The shares of Diebold Nixdorf, Incorporated (NYSE:DBD), has jumped by 191.97% year to date as of 11/29/2019. The shares currently trade at $7.27 and have been able to report a change of -4.22% over the past one week.
The stock of Mattel, Inc. and Diebold Nixdorf, Incorporated 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.
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 MAT will grow it’s earning at a 10.00% annual rate in the next 5 years. This is in contrast to DBD which will have a positive growth at a 3.00% annual rate. This means that the higher growth rate of MAT 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. MAT has an EBITDA margin of 5.77%, this implies that the underlying business of MAT is more profitable. The ROI of MAT is -9.80% while that of DBD is -18.00%. These figures suggest that MAT ventures generate a higher ROI than that of DBD.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, MAT’s free cash flow per share is a negative -3.07, while that of DBD is positive 1.43.
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 MAT is 1.60 and that of DBD is 1.20. This implies that it is easier for MAT to cover its immediate obligations over the next 12 months than DBD.Valuation
MAT currently trades at a forward P/E of 92.86, a P/B of 8.93, and a P/S of 0.90 while DBD trades at a forward P/E of 8.28, and a P/S of 0.13. This means that looking at the earnings, book values and sales basis, MAT 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 MAT is currently at a -15.16% to its one-year price target of 13.79. Looking at its rival pricing, DBD is at a -44.08% relative to its price target of 13.00.
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), MAT is given a 2.70 while 2.40 placed for DBD. This means that analysts are more bullish on the outlook for MAT 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 MAT is 19.52 while that of DBD is just 11.11. This means that analysts are more bullish on the forecast for DBD stock.
The stock of Mattel, Inc. defeats that of Diebold Nixdorf, Incorporated when the two are compared, with MAT taking 5 out of the total factors that were been considered. MAT 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, MAT is the cheaper one on an earnings, book value and sales basis. Finally, the sentiment signal for MAT is better on when it is viewed on short interest.