The shares of Freeport-McMoran, Inc. (NYSE:FCX) and Cisco Systems, Inc. (NASDAQ:CSCO) were among the active stocks of the last trading sessions. Freeport-McMoran, Inc. (NYSE:FCX) declined to -2.64% closing at the price of $13.27 whereas the shares of Cisco Systems, Inc. (NASDAQ:CSCO) declined -0.52% with the decrease of -0.25 points closing at the price of $48.13. Freeport-McMoran, Inc. has currently decrease -23.87% in its stock over the period of 6-months while its rival Cisco Systems, Inc. added 16.91% 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 Freeport-McMoran, Inc. (NYSE:FCX) is 11.3% while the ROI of Cisco Systems, Inc. (NASDAQ:CSCO) is 14.2%. Another figure that is to be considered while analyzing the profitability of a share is its EBITDA margin, FCX’s EBITDA Margin is 4.57 whereas CSCO’s is 13.6.
Both the profitability ratios suggest that Cisco Systems, Inc. (NASDAQ:CSCO) is more suitable investment in terms of profitability and return.
EPS & Surprise Factor
Freeport-McMoran, Inc. (NYSE:FCX) reported $0.58/share EPS for the previous quarter where analysts were predicting an EPS to be $0.52/share Thus beating the analyst Estimates with a Surprise Factor of 11.5 Percent. While, Cisco Systems, Inc. (NASDAQ:CSCO) reported EPS of $0.7/share in the last quarter. The analysts projected EPS of $0.69/share depicting a Surprise of 1.4 Percent.
Taking a look at Earnings per Share, Freeport-McMoran, Inc. tends to be beating the analyst estimates more than Cisco Systems, Inc.. so FCX is more profitable than CSCO.
Technical Analysis of Freeport-McMoran, Inc. & Cisco Systems, Inc.
Moving average convergence divergence (MACD) shows that Freeport-McMoran, Inc. (NYSE:FCX) is on a PRICE RELATIVITY trend While Cisco Systems, Inc. (NASDAQ:CSCO) is on PRICE RELATIVITY trend. The trend for the past 10-days shows that the Freeport-McMoran, Inc. was in BEARISH territory and Cisco Systems, Inc. was in BULLISH territory.
FCX’s current statistics gauge that the stock candle is BEARISH with LOW volatility. While CSCO’s candle is BEARISH with LOW.
EPS Growth Rate: FCX’s 6.2% versus CSCO’s 8.92%
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 Freeport-McMoran, Inc. (NYSE:FCX) is predicted at 6.2% while Cisco Systems, Inc. (NASDAQ:CSCO) stands at 8.92%. These numbers suggest that CSCO 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 FCX stands at 2.7 while CSCO is at 2.3 whereas the debt ratio of the prior is 1.17 while the debt ratio of the later is 0.59.
The values of the both ratios suggest that FCX is more suitable investment when the liquidity and risk is the main concern.
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 2.7 for FCX and 2.1 for CSCO which means FCX has Hold rating whereas CSCO has Hold 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 FCX is $18.29 which is 27.45% of its current price while CSCO has price target of 51.32 which is 6.22% 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.
FCX currently has price to earning P/E ratio of 7.81 whereas CSCO has 22.42 while the forward P/E ratio for the prior stands at 13.39 and for the later it depicts the value of 14.74.
The price to Book P/B for FCX is 2.03, Price to Sale is at 1.02 and for CSCO these ratios stand at 5.2 and 4.48.