The shares of Riot Blockchain, Inc. have increased by more than 366.94% this year alone. The shares recently went up by 42.01% or $4.73 and now trades at $15.99. The shares of Social Reality, Inc. (NASDAQ:SRAX), has slumped by -5.21% year to date as of 11/22/2017. The shares currently trade at $5.82 and have been able to report a change of 80.75% over the past one week.
The stock of Riot Blockchain, Inc. and Social Reality, Inc. were two of the most active stocks on Wedday. 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.
Next 5Y EPS Growth: 20.00% versus 15.00%
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 RIOT will grow it’s earning at a 20.00% annual rate in the next 5 years. This is in contrast to SRAX which will have a positive growth at a 15.00% annual rate. This means that the higher growth rate of RIOT implies a greater potential for capital appreciation over the years.
The value of a stock is ultimately determined by the amount of cash flow that the investors have available. Over the last 12 months, RIOT’s free cash flow per share is a negative -0.83, while that of SRAX is positive 0.
RIOT currently trades at a forward P/B of 7.83, and a P/S of 14111.82 while SRAX trades at a forward P/E of 11.41, a P/B of 6.06, and a P/S of 1.77. This means that looking at the earnings, book values and sales basis, SRAX 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 RIOT is currently at a 299.75% to its one-year price target of 4.00. Looking at its rival pricing, SRAX is at a 16.4% relative to its price target of 5.00. This figure implies that over the next one year, SRAX is a better investment.
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), RIOT is given a 3.00 while 2.00 placed for SRAX. This means that analysts are more bullish on the outlook for RIOT 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 RIOT is 0.65 while that of SRAX is just 0.86. This means that analysts are more bullish on the forecast for RIOT stock.
The stock of Riot Blockchain, Inc. defeats that of Social Reality, Inc. when the two are compared, with RIOT taking 5 out of the total factors that were been considered. RIOT 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, RIOT is the cheaper one on an earnings, book value and sales basis. Finally, the sentiment signal for RIOT is better on when it is viewed on short interest.