The shares of Western Union Company (The) (NYSE:WU) and Merck & Company, Inc. (NYSE:MRK) were among the active stocks of the last trading sessions. Western Union Company (The) (NYSE:WU) declined to -2.31% closing at the price of $18.17 whereas the shares of Merck & Company, Inc. (NYSE:MRK) declined -0.27% with the decrease of -0.19 points closing at the price of $71.03. Western Union Company (The) has currently decrease -2.89% in its stock over the period of 6-months while its rival Merck & Company, Inc. added 26.48% 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 Western Union Company (The) (NYSE:WU) is 15.6% while the ROI of Merck & Company, Inc. (NYSE:MRK) is 8.7%. Another figure that is to be considered while analyzing the profitability of a share is its EBITDA margin, WU’s EBITDA Margin is 8.1 whereas MRK’s is 17.11.
Both the profitability ratios suggest a mixed sentiment for Western Union Company (The) (NYSE:WU) and Merck & Company, Inc. (NYSE:MRK).
EPS & Surprise Factor
Western Union Company (The) (NYSE:WU) reported $0.46/share EPS for the previous quarter where analysts were predicting an EPS to be $0.47/share Thus lagging the analyst Estimates with a Surprise Factor of -2.1 Percent. While, Merck & Company, Inc. (NYSE:MRK) reported EPS of $1.06/share in the last quarter. The analysts projected EPS of $1.03/share depicting a Surprise of 2.9 Percent.
Taking a look at Earnings per Share, Merck & Company, Inc. tends to be beating the analyst estimates more than Western Union Company (The). so MRK is more profitable than WU.
Technical Analysis of Western Union Company (The) & Merck & Company, Inc.
Moving average convergence divergence (MACD) shows that Western Union Company (The) (NYSE:WU) is on a PRICE RELATIVITY trend While Merck & Company, Inc. (NYSE:MRK) is on PRICE RELATIVITY trend. The trend for the past 10-days shows that the Western Union Company (The) was in BEARISH territory and Merck & Company, Inc. was in BULLISH territory.
WU’s current statistics gauge that the stock candle is BEARISH with HIGH volatility. While MRK’s candle is BEARISH with MEDIUM.
EPS Growth Rate: WU’s 4.17% versus MRK’s 8.13%
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 Western Union Company (The) (NYSE:WU) is predicted at 4.17% while Merck & Company, Inc. (NYSE:MRK) stands at 8.13%. These numbers suggest that MRK 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 WU stands at 0 while MRK is at 1.3 whereas the debt ratio of the prior is 0 while the debt ratio of the later is 0.72.
The values of the both ratios suggest that MRK 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 3.1 for WU and 1.9 for MRK which means WU has Sell rating whereas MRK 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 WU is $20.72 which is 12.31% of its current price while MRK has price target of 73.92 which is 3.91% 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.
WU currently has price to earning P/E ratio of 22.6 whereas MRK has 48.75 while the forward P/E ratio for the prior stands at 9.43 and for the later it depicts the value of 15.3.
The price to Book P/B for WU is 0, Price to Sale is at 1.47 and for MRK these ratios stand at 5.86 and 4.59.