The shares of Intel Corporation have increased by more than 22.86% this year alone. The shares recently went down by -0.67% or -$0.39 and now trades at $57.66. The shares of Trip.com Group Limited (NASDAQ:TCOM), has jumped by 17.81% year to date as of 12/02/2019. The shares currently trade at $31.88 and have been able to report a change of -1.39% over the past one week.
The stock of Intel Corporation and Trip.com Group Limited 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.
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 INTC will grow it’s earning at a 7.04% annual rate in the next 5 years. This is in contrast to TCOM which will have a positive growth at a 11.20% annual rate. This means that the higher growth rate of TCOM 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. INTC has an EBITDA margin of 45.41%, this implies that the underlying business of INTC is more profitable. The ROI of INTC is 20.60% while that of TCOM is 1.20%. These figures suggest that INTC ventures generate a higher ROI than that of TCOM.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, INTC’s free cash flow per share is a positive 6.45.
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 INTC is 1.20 and that of TCOM is 1.00. This implies that it is easier for INTC to cover its immediate obligations over the next 12 months than TCOM. The debt ratio of INTC is 0.39 compared to 0.57 for TCOM. TCOM can be able to settle its long-term debts and thus is a lower financial risk than INTC.Valuation
INTC currently trades at a forward P/E of 12.33, a P/B of 3.41, and a P/S of 3.59 while TCOM trades at a forward P/E of 2.86, a P/B of 1.27, and a P/S of 3.56. This means that looking at the earnings, book values and sales basis, TCOM 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 INTC is currently at a 2% to its one-year price target of 56.53.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 INTC is 3.08 while that of TCOM is just 2.31. This means that analysts are more bullish on the forecast for TCOM stock.
The stock of Trip.com Group Limited defeats that of Intel Corporation when the two are compared, with TCOM taking 6 out of the total factors that were been considered. TCOM 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, TCOM is the cheaper one on an earnings, book value and sales basis. Finally, the sentiment signal for TCOM is better on when it is viewed on short interest.