The shares of Mallinckrodt plc (NYSE:MNK) and Momo Inc. (NASDAQ:MOMO) were among the active stocks of the last trading sessions. Mallinckrodt plc (NYSE:MNK) soared to 0.54% closing at the price of $25.87 whereas the shares of Momo Inc. (NASDAQ:MOMO) soared 0.03% with the increase of 0.01 points closing at the price of $39.12. Mallinckrodt plc has currently increase 77.56% in its stock over the period of 6-months while its rival Momo Inc. added 6.33% in the previous 6-months.
Now we have to analyze the facts that if the stocks were worthy off investors’ money? The facts to analyze here are risks, profitability, returns and price trends.
Returns and Profitability
Profitability and returns are the main reason of investment, the investors are looking for profits that they get and return they should expect over the period of time.
The first and foremost return that is considered while making an investment is the ROI or Return on Investment. The ROI is the ratio between the profit against the cost of investment. Currently the ROI of Mallinckrodt plc (NYSE:MNK) is 12.6% while the ROI of Momo Inc. (NASDAQ:MOMO) is 28.1%. Another figure that is to be considered while analyzing the profitability of a share is its EBITDA margin, MNK’s EBITDA Margin is 6.26 whereas MOMO’s is 17.88.
Both the profitability ratios suggest that Momo Inc. (NASDAQ:MOMO) is more suitable investment in terms of profitability and return.
EPS & Surprise Factor
Mallinckrodt plc (NYSE:MNK) reported $1.78/share EPS for the previous quarter where analysts were predicting an EPS to be $1.48/share Thus beating the analyst Estimates with a Surprise Factor of 20.3 Percent. While, Momo Inc. (NASDAQ:MOMO) reported EPS of $0.66/share in the last quarter. The analysts projected EPS of $0.61/share depicting a Surprise of 8.2 Percent.
Taking a look at Earnings per Share, Mallinckrodt plc tends to be beating the analyst estimates more than Momo Inc.. so MNK is more profitable than MOMO.
Technical Analysis of Mallinckrodt plc & Momo Inc.
Moving average convergence divergence (MACD) shows that Mallinckrodt plc (NYSE:MNK) is on a PRICE RELATIVITY trend While Momo Inc. (NASDAQ:MOMO) is on PRICE RELATIVITY trend. The trend for the past 10-days shows that the Mallinckrodt plc was in BEARISH territory and Momo Inc. was in BEARISH territory.
MNK’s current statistics gauge that the stock candle is BEARISH with HIGH volatility. While MOMO’s candle is BEARISH with HIGH.
EPS Growth Rate: MNK’s 9.17% versus MOMO’s 27.97%
Another shareholder value can be analyzed through the EPS growth rate; the next 5 years EPS growth rate is predicted by the analysts after the analyzing the previous trends. The next 5 year EPS growth rate of Mallinckrodt plc (NYSE:MNK) is predicted at 9.17% while Momo Inc. (NASDAQ:MOMO) stands at 27.97%. These numbers suggest that MOMO is more suitable investment in terms of EPS growth rate.
Financial Risk and Liquidity Concerns
The current ratio and the debt ratio are the two ratios that show the investor how quickly the company is able to payout its debt and how quickly it can cover its obligations. The current ratio of MNK stands at 2.3 while MOMO is at 3.5 whereas the debt ratio of the prior is 0.98 while the debt ratio of the later is 0.21.
The values of the both ratios suggest that one is more liquid and other investment is more risk free.
While making an investment, another main factor to consider before investing is the analyst recommendation on the scale of 1 to 5 where 1 is strong buy, 2 is buy, 3 is hold, 4 is Sell and 5 is strong sell. Analyst recommend 2.9 for MNK and 1.7 for MOMO which means MNK has Hold rating whereas MOMO has Buy rating.
Another recommendation of analyst that is to be considered worthy is the price target. The mare price or price trend does not suggest the suitability of a stock. The price target set by analyst is also to be considered while investing as it suggests to what extent the stock will rise or fall in the near future. The price target set for MNK is $31.25 which is 17.22% of its current price while MOMO has price target of 56.44 which is 30.69% of its current price.
Valuation is the process of determining the company’s worth for an investor, the valuation ratios give an insight to that worthiness.
MNK currently has price to earning P/E ratio of 2.1 whereas MOMO has 19.27 while the forward P/E ratio for the prior stands at 3.45 and for the later it depicts the value of 12.02.
The price to Book P/B for MNK is 0.33, Price to Sale is at 0.77 and for MOMO these ratios stand at 5.6 and 4.71.