Vinco Ventures, Inc. (BBIG) in Bethlehem, Pa., is a consumer product research and development, manufacturing, sales, and fulfillment company in North America, the Asia Pacific, and Europe. In comparison, Quad/Graphics, Inc. (QUAD) provides marketing solutions worldwide. The Sussex, Wis.-based company provides marketing and other services, including consumer insights, audience targeting, personalization, and media planning.
Meme stocks have become a topic of interest since shares of video game retailer GameStop, Inc. (GME) witnessed the greatest short squeeze in history earlier this year, fueled by social media buzz. These stocks typically soar due to increased retail investor interest, triggered by chatter about them on social media platforms such as Reddit and Twitter. While meme stocks are usually risky investments, betting on those with solid growth prospects and strong financials could be rewarding.
BBIG has gained 183% in price over the past six months, while QUAD has slumped 25.6% over the period. Also, BBIG’s 494.9% gains year-to-date compare with QUAD’s 5.8% returns. Furthermore, in terms of past year’s performance, BBIG is the clear winner with 352.8% price gains versus QUAD’s 28.3%.
But which stock is a better buy now? Let’s find out.
Latest Developments
On July 23, BBIG acquired Lomotif Private Limited, which owns the Lomotif short-form video platform, through its joint venture entity ZVV Media. The acquisition is expected to enhance the joint entity’s offering by adding a short-form video component to its overall ecosystem.
On June 30, QUAD sold its QuadExpress third-party logistics (3PL) business for $40 million. The sale aligns with the company’s strategy to optimize its product and service portfolio and create more value for its clients. QUAD plans to use the proceeds to continue to pay down debt and improve its debt leverage ratio.
Recent Financial Results
BBIG’s revenue decreased 48% year-over-year to $2.69 million in its fiscal second quarter, ended June 30. Its gross profit stood at $0.97 million, down 17% from the same period last year. Its net loss grew 11,207% from its year-ago loss to $183.67 million. The company’s net loss per share increased 2,750% year-over-year to $5.13.
QUAD’s net sales increased 18.7% year-over-year to $693.90 million in its fiscal second quarter, ended June 30. Its income from continuing operations grew 1,814.3% from its year-ago loss to $48 million, while its net earnings improved 245.1% year-over-year to $34.40 million. In addition, the company’s EPS improved 243.5% year-over-year to $0.66.
Past Financial Performance
BBIG’s total assets grew at a 132.6% CAGR over the past three years, while its revenues declined slightly over this period. In comparison , QUAD’s total assets and revenues declined at CAGRs of 10.2% and 10.4%, respectively, over the past three years.
Profitability
QUAD is more profitable with 3.01% and 8.76% respective EBIT and EBITDA margins, versus BBIG’s negative 142.43% and 129.33%.
Furthermore, QUAD’s 2.82% ROA compares with BBIG’s negative 16.81%.
Valuation
In terms of trailing-12-months EV/Sales, BBIG is currently trading at 44.05x, which is 99.2% higher than QUAD, which is currently trading at 0.36x. Also, BBIG’s 11.71 trailing-12-months Price/Sales ratio is 99.4% higher than QUAD’s 0.07.
Thus, QUAD is a relatively affordable stock here.
POWR Ratings
QUAD has an overall B rating, which equates to Buy in our proprietary POWR Ratings system. BBIG, on the other hand, has an overall F rating, which translates to Strong Sell. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
QUAD has an A grade, for Value, while BBIG has an F grade for Value. QUAD’s 0.36 trailing-12-month EV/Sales ratio is 81.6% lower than the 1.98 industry average, in sync with its Value grade. On the other hand, BBIG’s 44.05 trailing-12-months EV/Sales multiple is 2,683.6% higher than the 1.58 industry average, consistent with its grade.
QUAD has a B grade for Growth, consistent with its stable rise in financials in the recent quarter. BBIG, on the other hand, has a Growth grade of F, consistent with the company’s bleak financial performance in the most recent quarter.
Of the 48 stocks in the B-rated Outsourcing - Business Services industry, QUAD is ranked #13. In contrast, among the 71 stocks in the D-rated Consumer Goods industry, BBIG is ranked #70.
Beyond what we’ve stated above, we have also rated stocks for Stability, Momentum, Sentiment, and Quality. Click here to view QUAD ratings. Also, get all BBIG ratings here.
The Winner
The price momentum gained by meme stocks is not generally based on their business performance. Between the two meme stocks we discussed here, QUAD’s gains are backed by solid financials and stable profit margins, making it the better investment option.
Our research shows that odds of success increase when one invests in stocks with an Overall Rating of Strong Buy or Buy. View all the top-rated stocks in the Outsourcing - Business Services industry here. Also, click here to view the top-rated stocks in the Consumer Goods industry.
BBIG shares were unchanged in after-hours trading Thursday. Year-to-date, BBIG has gained 507.30%, versus a 20.39% rise in the benchmark S&P 500 index during the same period.
About the Author: Subhasree Kar
Subhasree’s keen interest in financial instruments led her to pursue a career as an investment analyst. After earning a Master’s degree in Economics, she gained knowledge of equity research and portfolio management at Finlatics.
The post Vinco Ventures vs. Quad: Which Meme Stock is a Better Buy? appeared first on StockNews.com