The shares of The PNC Financial Services Group, Inc. have increased by more than 17.33% this year alone. The shares recently went up by 0.86% or $1.17 and now trades at $137.17. The shares of Jack in the Box Inc. (NASDAQ:JACK), has jumped by 11.84% year to date as of 09/12/2019. The shares currently trade at $86.82 and have been able to report a change of 0.00% over the past one week.
The stock of The PNC Financial Services Group, Inc. and Jack in the Box Inc. were two of the most active stocks on Thursday. 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 PNC will grow it’s earning at a 5.50% annual rate in the next 5 years. This is in contrast to JACK which will have a positive growth at a 12.90% annual rate. This means that the higher growth rate of JACK 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. PNC has an EBITDA margin of 64.12%, this implies that the underlying business of PNC is more profitable. The ROI of PNC is 10.00% while that of JACK is 38.20%. These figures suggest that JACK ventures generate a higher ROI than that of PNC.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, PNC’s free cash flow per share is a positive 5.35.
PNC currently trades at a forward P/E of 11.49, a P/B of 1.25, and a P/S of 4.52 while JACK trades at a forward P/E of 18.07, and a P/S of 2.44. This means that looking at the earnings, book values and sales basis, PNC 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 PNC is currently at a -5.28% to its one-year price target of 144.81. Looking at its rival pricing, JACK is at a -8.07% relative to its price target of 94.44.
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), PNC is given a 2.50 while 2.20 placed for JACK. This means that analysts are more bullish on the outlook for PNC 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 PNC is 2.14 while that of JACK is just 7.80. This means that analysts are more bullish on the forecast for PNC stock.
The stock of The PNC Financial Services Group, Inc. defeats that of Jack in the Box Inc. when the two are compared, with PNC taking 5 out of the total factors that were been considered. PNC 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, PNC is the cheaper one on an earnings, book value and sales basis. Finally, the sentiment signal for PNC is better on when it is viewed on short interest.