The shares of Roku, Inc. have increased by more than 344.09% this year alone. The shares recently went down by -15.15% or -$24.3 and now trades at $136.07. The shares of Tesla, Inc. (NASDAQ:TSLA), has jumped by 0.62% year to date as of 12/02/2019. The shares currently trade at $334.87 and have been able to report a change of 0.55% over the past one week.
The stock of Roku, Inc. and Tesla, Inc. were two of the most active stocks on Monday. 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. The ROI of ROKU is -5.20% while that of TSLA is -2.60%. These figures suggest that TSLA ventures generate a higher ROI than that of ROKU.
The value of a stock is ultimately determined by the amount of cash flow that the investors have available. Over the last 12 months, ROKU’s free cash flow per share is a positive -0, while that of TSLA is positive 1.58.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 current ratio for ROKU is 2.50 and that of TSLA is 1.10. This implies that it is easier for ROKU to cover its immediate obligations over the next 12 months than TSLA. The debt ratio of ROKU is 0.00 compared to 2.21 for TSLA. TSLA can be able to settle its long-term debts and thus is a lower financial risk than ROKU.
ROKU currently trades at a P/B of 34.27, and a P/S of 16.30 while TSLA trades at a forward P/E of 63.17, a P/B of 9.93, and a P/S of 2.48. This means that looking at the earnings, book values and sales basis, TSLA 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 ROKU is currently at a -3.52% to its one-year price target of 141.04. Looking at its rival pricing, TSLA is at a 20.96% relative to its price target of 276.85.
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), ROKU is given a 2.20 while 2.90 placed for TSLA. This means that analysts are more bullish on the outlook for TSLA 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 ROKU is 0.56 while that of TSLA is just 3.64. This means that analysts are more bullish on the forecast for ROKU stock.
The stock of Tesla, Inc. defeats that of Roku, Inc. when the two are compared, with TSLA taking 6 out of the total factors that were been considered. TSLA 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, TSLA is the cheaper one on an earnings, book value and sales basis. Finally, the sentiment signal for TSLA is better on when it is viewed on short interest.