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Shares of Western Digital Corporation (NASDAQ: WDC) have lost more than -3.96% this year and have recently fallen -0.34% or -0.26 to 76, $ 38. Hertz Global Holdings, Inc. (NYSE: HTZ), by contrast, is down -36.47% from the beginning of the year to 23/07/2018. It is currently trading at $ 14.04 and has returned 1.96% over the last week.
Western Digital Corporation (NASDAQ: WDC) and Hertz Global Holdings, Inc. (NYSE: HTZ) are the two most active stocks in the data storage device industry based on trading volumes of 39%. ; aujourd & # 39; hui. Investors are clearly interested in both names, but is one a better choice than the other? We will compare the two companies through growth, profitability, risk, valuation and internal trends to answer this question.
Growth
Companies that can increase profits at a high compound rate are attractive to investors. Analysts expect WDC to increase profits at an annual rate of 25.55% over the next 5 years
Profitability and Returns
Growth in itself is not necessarily valuable and may even harm the shareholders. projects in pursuit of this growth. We will use EBITDA margin and return on invested capital (ROCE), which account for differences in capital structure, as a measure of profitability and performance. compared to an EBITDA margin of 29.88% for Hertz Global Holdings, Inc. (HTZ). The return on investment of WDC is 6.40% while HTZ has an ROI of 11.40%. The interpretation is that the activity of HTZ generates a higher return on investment than that of WDC
Cash Flow
The amount of free cash flow for investors is ultimately what determines the value of an action. Free cash flow ("FCF") per share of WDC for the last twelve months was +2.12. Comparatively, HTZ's free cash flow per share was -38.65. In terms of percentage of sales, WDC's free cash flow was 3.32% while HTZ converted -36.91% of its revenue into cash flow. This means that for a given level of sales, WDC is able to generate more free cash flow for investors.
Liquidity and Financial Risk
The debt ratio of WDC is 0.99 against a D / E of 14.84 for HTZ. HTZ is therefore the most solvent of the two companies and presents a lower financial risk.
Evaluation
WDC trades at a forward P / E of 5.67, a P / B of 2.01, and a P / S of 1.15, compared to a P / E before 45.58, a P / B of 1.03, and a P / S of 0.13 for HTZ. WDC is the cheapest of the two stocks on the basis of profits, but it is expensive in terms of P / B and P / S ratio. Since profits are the most important for investors, badysts tend to more weight at the price / earnings ratio.
Targets and opinions on badyst prices
the stock is accurately valued. To get an idea of "value", we have to compare the current price to a measure of intrinsic value as a price target. WDC is currently set at a 34% price to its 115.73 year target. Comparatively, HTZ is -33.59% compared to its price target of 21.14. This suggests that WDC is the best investment in the next year.
Risk and Volatility
To badess the market risk of a particular security, investors use the beta. Stocks with beta greater than 1 are more volatile than the market as a whole. Conversely, a beta below 1 implies a lower than average systematic risk. WDC has a beta of 1.03 and beta of HTZ is 1.80. WDC shares are therefore the least volatile of the two shares
Insider activity and investor sentiment
Comparing the number of shares sold short to float is a method that badysts often use to get an idea of investor sentiment WDC has a short ratio of 2.09 compared to a short interest of 5.39 for HTZ. This implies that the market is currently less bearish on the outlook for WDC.
Abstract
Western Digital Corporation (NASDAQ: WDC) defeats Hertz Global Holdings, Inc. (NYSE: HTZ) out of a total of 10 of the 14 factors compared between the two stocks. WDC is growing fast, has a higher cash flow per share, has a higher cash conversion rate, higher liquidity and lower financial risk. WDC is more undervalued compared to its price target. Finally, WDC has better sentiment signals based on a short interest.
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