The shares of Baidu, Inc. (NASDAQ:BIDU) and Fortinet, Inc. (NASDAQ:FTNT) were among the active stocks of the last trading sessions. Baidu, Inc. (NASDAQ:BIDU) declined to -2.12% closing at the price of $205.62 whereas the shares of Fortinet, Inc. (NASDAQ:FTNT) declined -3.57% with the decrease of -3.19 points closing at the price of $86.1. Baidu, Inc. has currently decrease -8.34% in its stock over the period of 6-months while its rival Fortinet, Inc. added 58.07% 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 Baidu, Inc. (NASDAQ:BIDU) is 6.4% while the ROI of Fortinet, Inc. (NASDAQ:FTNT) is 13.6%. Another figure that is to be considered while analyzing the profitability of a share is its EBITDA margin, BIDU’s EBITDA Margin is 13.01 whereas FTNT’s is 63.6.
Both the profitability ratios suggest that Fortinet, Inc. (NASDAQ:FTNT) is more suitable investment in terms of profitability and return.
EPS & Surprise Factor
Baidu, Inc. (NASDAQ:BIDU) reported $3.06/share EPS for the previous quarter where analysts were predicting an EPS to be $2.41/share Thus beating the analyst Estimates with a Surprise Factor of 27 Percent. While, Fortinet, Inc. (NASDAQ:FTNT) reported EPS of $0.41/share in the last quarter. The analysts projected EPS of $0.36/share depicting a Surprise of 13.9 Percent.
Taking a look at Earnings per Share, Baidu, Inc. tends to be beating the analyst estimates more than Fortinet, Inc.. so BIDU is more profitable than FTNT.
Technical Analysis of Baidu, Inc. & Fortinet, Inc.
Moving average convergence divergence (MACD) shows that Baidu, Inc. (NASDAQ:BIDU) is on a PRICE RELATIVITY trend While Fortinet, Inc. (NASDAQ:FTNT) is on PRICE RELATIVITY trend. The trend for the past 10-days shows that the Baidu, Inc. was in BEARISH territory and Fortinet, Inc. was in BEARISH territory.
BIDU’s current statistics gauge that the stock candle is BEARISH with HIGH volatility. While FTNT’s candle is BEARISH with HIGH.
EPS Growth Rate: BIDU’s 2.75% versus FTNT’s 26%
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 Baidu, Inc. (NASDAQ:BIDU) is predicted at 2.75% while Fortinet, Inc. (NASDAQ:FTNT) stands at 26%. These numbers suggest that FTNT 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 BIDU stands at 2.2 while FTNT is at 1.7 whereas the debt ratio of the prior is 0.36 while the debt ratio of the later is 0.
The values of the both ratios suggest that BIDU 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 for BIDU and 2.6 for FTNT which means BIDU has Buy rating whereas FTNT 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 BIDU is $295.58 which is 30.44% of its current price while FTNT has price target of 75.61 which is -13.87% 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.
BIDU currently has price to earning P/E ratio of 19.73 whereas FTNT has 98.51 while the forward P/E ratio for the prior stands at 17.43 and for the later it depicts the value of 44.63.
The price to Book P/B for BIDU is 3.31, Price to Sale is at 5.38 and for FTNT these ratios stand at 18.6 and 9.26.