The shares of Roku, Inc. (NASDAQ:ROKU) and Texas Instruments Incorporated (NASDAQ:TXN) were among the active stocks of the last trading sessions. Roku, Inc. (NASDAQ:ROKU) soared to 0.18% closing at the price of $66.94 whereas the shares of Texas Instruments Incorporated (NASDAQ:TXN) declined -2.45% with the decrease of -2.59 points closing at the price of $103.28. Roku, Inc. has currently increase 105.27% in its stock over the period of 6-months while its rival Texas Instruments Incorporated added 3.48% 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 Roku, Inc. (NASDAQ:ROKU) is -14.6% while the ROI of Texas Instruments Incorporated (NASDAQ:TXN) is 26%. Another figure that is to be considered while analyzing the profitability of a share is its EBITDA margin, ROKU’s EBITDA Margin is 33067.95 whereas TXN’s is 13.9.
Both the profitability ratios suggest a mixed sentiment for Roku, Inc. (NASDAQ:ROKU) and Texas Instruments Incorporated (NASDAQ:TXN).
EPS & Surprise Factor
Roku, Inc. (NASDAQ:ROKU) reported $0/share EPS for the previous quarter where analysts were predicting an EPS to be $-0.15/share Thus beating the analyst Estimates with a Surprise Factor of 100 Percent. While, Texas Instruments Incorporated (NASDAQ:TXN) reported EPS of $1.4/share in the last quarter. The analysts projected EPS of $1.32/share depicting a Surprise of 6.1 Percent.
Taking a look at Earnings per Share, Roku, Inc. tends to be beating the analyst estimates more than Texas Instruments Incorporated. so ROKU is more profitable than TXN.
Technical Analysis of Roku, Inc. & Texas Instruments Incorporated
Moving average convergence divergence (MACD) shows that Roku, Inc. (NASDAQ:ROKU) is on a PRICE RELATIVITY trend While Texas Instruments Incorporated (NASDAQ:TXN) is on PRICE RELATIVITY trend. The trend for the past 10-days shows that the Roku, Inc. was in BEARISH territory and Texas Instruments Incorporated was in BEARISH territory.
ROKU’s current statistics gauge that the stock candle is BULLISH with HIGH volatility. While TXN’s candle is BEARISH with HIGH.
EPS Growth Rate: ROKU’s 21% versus TXN’s 13.57%
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 Roku, Inc. (NASDAQ:ROKU) is predicted at 21% while Texas Instruments Incorporated (NASDAQ:TXN) stands at 13.57%. These numbers suggest that ROKU 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 ROKU stands at 2.4 while TXN is at 6.5 whereas the debt ratio of the prior is 0 while the debt ratio of the later is 0.48.
The values of the both ratios suggest that TXN 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 2.2 for ROKU and 2.3 for TXN which means ROKU has Hold rating whereas TXN 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 ROKU is $66.73 which is -0.31% of its current price while TXN has price target of 124.26 which is 16.88% 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.
ROKU currently has price to earning P/E ratio of 0 whereas TXN has 23.67 while the forward P/E ratio for the prior stands at 0 and for the later it depicts the value of 16.76.
The price to Book P/B for ROKU is 32.5, Price to Sale is at 11.69 and for TXN these ratios stand at 9.49 and 6.57.