Cerner Corporation (NASDAQ:CERN), on the other hand, is up 2.49% year to date as of 01/02/2018. It currently trades at $69.07 and has returned 2.05% during the past week.
Rennova Health, Inc. (NASDAQ:RNVA) and Cerner Corporation (NASDAQ:CERN) are the two most active stocks in the Healthcare Information Services industry based on today’s trading volumes. We will compare the two companies based on the strength of various metrics, including growth, profitability, risk, return, and valuation to determine if one is a better investment than the other.
Companies that can increase earnings at a high compound rate over time are attractive to investors. Comparatively, CERN is expected to grow at a 16.53% annual rate. All else equal, CERN’s higher growth rate would imply a greater potential for capital appreciation.
Profitability and Returns
Growth doesn’t mean much if it comes at the cost of weak profitability. To adjust for differences in capital structure we’ll use EBITDA margin and Return on Investment (ROI) as measures of profitability and return. EBITDA margin of 29.87% for Cerner Corporation (CERN). RNVA’s ROI is 1582.90% while CERN has a ROI of 14.00%. The interpretation is that RNVA’s business generates a higher return on investment than CERN’s.
Cash is king when it comes to investing. RNVA’s free cash flow (“FCF”) per share for the trailing twelve months was -2.78. Comparatively, CERN’s free cash flow per share was +0.86. On a percent-of-sales basis, RNVA’s free cash flow was -0.3% while CERN converted 5.96% of its revenues into cash flow. This means that, for a given level of sales, CERN is able to generate more free cash flow for investors.
Liquidity and Financial Risk
Balance sheet risk is one of the biggest factors to consider before investing. RNVA has a current ratio of 0.30 compared to 2.80 for CERN. This means that CERN can more easily cover its most immediate liabilities over the next twelve months.
RNVA trades at a P/S of 0.03, compared to a forward P/E of 26.60, a P/B of 5.02, and a P/S of 4.55 for CERN. RNVA is the cheaper of the two stocks on an earnings, book value and sales basis. Given that earnings are what matter most to investors, analysts tend to place a greater weight on the P/E.
Analyst Price Targets and Opinions
When investing it’s crucial to distinguish between price and value. As Warren Buffet said, “price is what you pay, value is what you get”. RNVA is currently priced at a -99.99% to its one-year price target of 555.00. Comparatively, CERN is -2.15% relative to its price target of 70.59. This suggests that RNVA is the better investment over the next year.
Risk and Volatility
Analyst use beta to measure a stock’s volatility relative to the overall market. Stocks with a beta above 1 tend to have bigger swings in price than the market as a whole, the opposite being the case for stocks with a beta below 1. RNVA has a beta of -0.61 and CERN’s beta is 0.95. RNVA’s shares are therefore the less volatile of the two stocks.
Rennova Health, Inc. (NASDAQ:RNVA) beats Cerner Corporation (NASDAQ:CERN) on a total of 9 of the 14 factors compared between the two stocks. RNVA generates a higher return on investment and has lower financial risk. In terms of valuation, RNVA is the cheaper of the two stocks on an earnings, book value and sales basis, RNVA is more undervalued relative to its price target. Finally, RNVA has better sentiment signals based on short interest.