Tumbling to a price of $65.38 during today's morning trading session, shares of Aptiv PLC are now -28.17% below their average target price of $91.02. Does this mean the stock will reverse course? Analysts are giving APTV an average rating of buy and target prices ranging from 63.0 to 147.0 dollars per share.
The market is more pessimistic on Aptiv PLC, because its short interest -- meaning the percentage of its shares that are being shorted on an expectation of a price decline -- is quite high at 18.0%. The float includes only shares that are available for public trading, and excludes preferred shares held by insiders.
Short selling involves borrowing shares and then selling them at current market prices. In the successful version of the strategy, the shares are purchased at a lower price at some time in the future. The investor then returns the shares to the lender, and keeps the profit made on the sell/buy transaction.
One way to get an idea of the market sentiment on a stock is to check its rate of institutional ownership. In the case of Aptiv PLC, institutional investors own 101.5% of the shares, which indicates they have a very high stake in the company. What does this really tell us?
Institutional investors such as hedge funds, investment firms, and wealth managers devote significant resources to identifying good investments. If they have decided to invest in APTV, it probably means they believe it is a solid investment choice.
But it could also mean they are buying up shares in an effort to acquire the company or to get seats on the board of directors. Also bear in mind that institutions are fallible (just maybe not quite as fallible as the average retail investor), so they may simply be wrong when they think they've found a good stock.
Overall, there is mixed market sentiment towards Aptiv PLC because of an analyst consensus of strong upside potential, a buy rating, an unusually large proportion of its shares sold short, and a significant number of institutional investors. Investors should not base their decisions on market sentiment only, they should also be aware of a stock's fundamentals before committing.
At a glance, here are some essential statistics you may want to know about APTV:
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It has trailing 12 month earnings per share (EPS) of $13.25 per share
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Aptiv PLC has a trailing 12 month Price to Earnings (P/E) ratio of 4.9 while the S&P 500 average is 28.21
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The company has a Price to Book (P/B) ratio of 1.52 in contrast to the S&P 500's average ratio of 4.71
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Aptiv PLC is a Consumer Discretionary company, and the sector average P/E and P/B ratios are 22.15 and 3.11 respectively
