Comparing Profitability of these two stocks: Comcast Corporation (CMCSA), Alibaba Group Holding Limited (BABA)

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The shares of Comcast Corporation (NASDAQ:CMCSA) and Alibaba Group Holding Limited (NYSE:BABA) were among the active stocks of the last trading sessions. Comcast Corporation (NASDAQ:CMCSA) declined to -1.85% closing at the price of $34.56 whereas the shares of Alibaba Group Holding Limited (NYSE:BABA) declined -0.96% with the decrease of -1.5 points closing at the price of $154.63. Comcast Corporation has currently increase 1.8% in its stock over the period of 6-months while its rival Alibaba Group Holding Limited subtracted -8.97% 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 Comcast Corporation (NASDAQ:CMCSA) is 9.7% while the ROI of Alibaba Group Holding Limited (NYSE:BABA) is 10%. Another figure that is to be considered while analyzing the profitability of a share is its EBITDA margin, CMCSA’s EBITDA Margin is 7.87 whereas BABA’s is 33.44.

Both the profitability ratios suggest that Alibaba Group Holding Limited (NYSE:BABA) is more suitable investment in terms of profitability and return.

EPS & Surprise Factor

Comcast Corporation (NASDAQ:CMCSA) reported $0.65/share EPS for the previous quarter where analysts were predicting an EPS to be $0.6/share Thus beating the analyst Estimates with a Surprise Factor of 8.3 Percent. While, Alibaba Group Holding Limited (NYSE:BABA) reported EPS of $1.17/share in the last quarter. The analysts projected EPS of $1.19/share depicting a Surprise of -1.7 Percent.

Taking a look at Earnings per Share, Comcast Corporation tends to be beating the analyst estimates more than Alibaba Group Holding Limited. so CMCSA is more profitable than BABA.

Technical Analysis of Comcast Corporation & Alibaba Group Holding Limited

Moving average convergence divergence (MACD) shows that Comcast Corporation (NASDAQ:CMCSA) is on a PRICE RELATIVITY trend While Alibaba Group Holding Limited (NYSE:BABA) is on PRICE RELATIVITY trend. The trend for the past 10-days shows that the Comcast Corporation was in BEARISH territory and Alibaba Group Holding Limited was in BEARISH territory.

CMCSA’s current statistics gauge that the stock candle is BEARISH with LOW volatility. While BABA’s candle is BEARISH with HIGH.

EPS Growth Rate: CMCSA’s 16.26% versus BABA’s 4.47%

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 Comcast Corporation (NASDAQ:CMCSA) is predicted at 16.26% while Alibaba Group Holding Limited (NYSE:BABA) stands at 4.47%. These numbers suggest that CMCSA 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 CMCSA stands at 1 while BABA is at 1.4 whereas the debt ratio of the prior is 0.91 while the debt ratio of the later is 0.35.

The values of the both ratios suggest that one is more liquid and other investment is more risk free.

Analyst Recommendations

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 2.1 for CMCSA and 1.6 for BABA which means CMCSA has Hold rating whereas BABA 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 CMCSA is $43.02 which is 19.67% of its current price while BABA has price target of 229.21 which is 32.54% of its current price.

Valuation Ratios

Valuation is the process of determining the company’s worth for an investor, the valuation ratios give an insight to that worthiness.

CMCSA currently has price to earning P/E ratio of 14.58 whereas BABA has 47.89 while the forward P/E ratio for the prior stands at 12.41 and for the later it depicts the value of 20.5.

The price to Book P/B for CMCSA is 2.25, Price to Sale is at 1.85 and for BABA these ratios stand at 6.97 and 9.89.