The shares of Dropbox, Inc. have decreased by more than -12.82% this year alone. The shares recently went down by -1.55% or -$0.28 and now trades at $17.81. The shares of California Resources Corporation (NYSE:CRC), has slumped by -50.70% year to date as of 12/10/2019. The shares currently trade at $8.40 and have been able to report a change of 27.47% over the past one week.
The stock of Dropbox, Inc. and California Resources Corporation were two of the most active stocks on Tuesday. 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 DBX is -59.30% while that of CRC is 16.90%. These figures suggest that CRC ventures generate a higher ROI than that of DBX.
The value of a stock is ultimately determined by the amount of cash flow that the investors have available. Over the last 12 months, DBX’s free cash flow per share is a positive 7.46, while that of CRC is positive 4.7.
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 DBX is 1.20 and that of CRC is 0.70. This implies that it is easier for DBX to cover its immediate obligations over the next 12 months than CRC.
DBX currently trades at a forward P/E of 30.39, a P/B of 9.68, and a P/S of 4.60 while CRC trades at a forward P/E of 71.79, and a P/S of 0.13. This means that looking at the earnings, book values and sales basis, DBX 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 DBX is currently at a -39.46% to its one-year price target of 29.42. Looking at its rival pricing, CRC is at a -56.36% relative to its price target of 19.25.
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), DBX is given a 2.10 while 2.60 placed for CRC. This means that analysts are more bullish on the outlook for CRC stocks.
The stock of Dropbox, Inc. defeats that of California Resources Corporation when the two are compared, with DBX taking 7 out of the total factors that were been considered. DBX 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, DBX is the cheaper one on an earnings, book value and sales basis. Finally, the sentiment signal for DBX is better on when it is viewed on short interest.