Shutterfly, Inc. (NASDAQ:SFLY) and Weight Watchers International, Inc. (NASDAQ:WTW) are both Services companies that recently hit new highs. The recent price action of these companies has left many investors wondering what actions to take. To determine if one is a better investment than the other, we will compare the two names across various metrics, including growth, profitability, risk, return, dividends, and valuation.
Shutterfly, Inc. (NASDAQ:SFLY) operates in the Personal Services segment of the Services sector. The company has grown sales at a 19.10% annual rate over the past five years, putting it in the high growth category. SFLY has a net profit margin of 0.50% and is more profitable than the average company in the Personal Services industry. In terms of efficiency, SFLY has an asset turnover ratio of 1.08. This figure represents the amount of revenue a company generates per dollar of assets. SFLY’s financial leverage ratio is 1.2, which indicates that the company’s asset base is primarily funded by equity capital. Company’s return on equity, which is really just the product of the company’s profit margin, asset turnover, and financial leverage ratios, is 1.10%, which is worse than the Personal Services industry average ROE.
Stock’s free cash flow yield, which represents the amount of cash available to investors before dividends, expressed as a percentage of the stock price, is 12.14. Company trades at a P/E ratio of 79.83 , and is more expensive than the average stock in the Personal Services industry. The average investment recommendation for SFLY, taken from a group of Wall Street Analysts, is 2.80, or a hold.
Over the past three months, Shutterfly, Inc. insiders have been net buyers, dumping a net of -199,406 shares. This implies that insiders have been feeling relatively bearish about the outlook for SFLY. Insider activity and sentiment signals are important to monitor because they can shed light on how “risky” a stock is perceived to be at it’s current valuation. Knowing this, it makes sense to look at beta, a measure of market risk. SFLY has a beta of 0.87 and therefore an below average level of market volatility.
Weight Watchers International, Inc. (NYSE:WTW) operates in the Personal Services segment of the Services sector. WTW has increased sales at a -8.70% CAGR over the past five years, and is considered a low growth stock. The company has a net profit margin of 9.00% and is more profitable than the average Personal Services player. WTW’s return on equity of -9.80% is worse than the Personal Services industry average.
Stock has a payout ratio of 0.00%. According to this ratio, WTW should be able to continue making payouts at these levels. The company trades at a free cash flow yield of 1.61 and has a P/E of 44.10. Compared to the average company in the 23.68 space, WTW is relatively expensive. The average analyst recommendation for WTW is 2.50, or a hold. The average analyst recommendation for WTW is 2.50, or a hold.
Weight Watchers International, Inc. insiders have bought a net of 3,900 shares during the past three months, which implies that the company’s top executives have been feeling bullish about the stock’s outlook. Finally, WTW’s beta of 2.75 indicates that the stock has an below average level of market risk.
WTW has the better fundamentals, scoring higher on profitability and leverage metrics. WTW has better insider activity and sentiment signals.