Accuray Incorporated (ARAY) vs. At Avalara, Inc. (AVLR): Analyzing the Industry’s Most Active Stocks

The shares of Accuray Incorporated have increased by more than 10.56% this year alone. The shares recently went down by -3.83% or -$0.15 and now trades at $3.77. The shares of Avalara, Inc. (NYSE:AVLR), has jumped by 134.48% year to date as of 06/21/2019. The shares currently trade at $73.04 and have been able to report a change of 8.21% over the past one week.

The stock of Accuray Incorporated and Avalara, Inc. 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.

Profitability and Returns

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 ARAY is 29.40% while that of AVLR is -68.50%. These figures suggest that ARAY ventures generate a higher ROI than that of AVLR.

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, ARAY’s free cash flow per share is a positive -0.

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 ARAY is 1.70 and that of AVLR is 1.10. This implies that it is easier for ARAY to cover its immediate obligations over the next 12 months than AVLR. The debt ratio of ARAY is 0.00 compared to 0.00 for AVLR. AVLR can be able to settle its long-term debts and thus is a lower financial risk than ARAY.

Valuation

ARAY currently trades at a P/B of 6.98, and a P/S of 0.83 while AVLR trades at a forward P/E of 1826.00, a P/B of 29.57, and a P/S of 18.68. This means that looking at the earnings, book values and sales basis, ARAY 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 ARAY is currently at a -46.14% to its one-year price target of 7.00. Looking at its rival pricing, AVLR is at a -1.07% relative to its price target of 73.83.

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), ARAY is given a 2.60 while 2.00 placed for AVLR. This means that analysts are more bullish on the outlook for ARAY 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 ARAY is 6.02 while that of AVLR is just 2.96. This means that analysts are more bullish on the forecast for AVLR stock.

Conclusion

The stock of Avalara, Inc. defeats that of Accuray Incorporated when the two are compared, with AVLR taking 5 out of the total factors that were been considered. AVLR 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, AVLR is the cheaper one on an earnings, book value and sales basis. Finally, the sentiment signal for AVLR is better on when it is viewed on short interest.