The shares of Sprint Corporation (NYSE:S) and Lennar Corporation (NYSE:LEN) were among the active stocks of the last trading sessions. Sprint Corporation (NYSE:S) declined to -1.38% closing at the price of $6.44 whereas the shares of Lennar Corporation (NYSE:LEN) soared 0.2% with the increase of 0.09 points closing at the price of $44.78. Sprint Corporation has currently increase 25.29% in its stock over the period of 6-months while its rival Lennar Corporation subtracted -26.32% 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 Sprint Corporation (NYSE:S) is 3.9% while the ROI of Lennar Corporation (NYSE:LEN) is 4.9%. Another figure that is to be considered while analyzing the profitability of a share is its EBITDA margin, S’s EBITDA Margin is 4.84 whereas LEN’s is 16.92.
Both the profitability ratios suggest that Lennar Corporation (NYSE:LEN) is more suitable investment in terms of profitability and return.
EPS & Surprise Factor
Technical Analysis of Sprint Corporation & Lennar Corporation
Moving average convergence divergence (MACD) shows that Sprint Corporation (NYSE:S) is on a PRICE RELATIVITY trend While Lennar Corporation (NYSE:LEN) is on PRICE RELATIVITY trend. The trend for the past 10-days shows that the Sprint Corporation was in BULLISH territory and Lennar Corporation was in BEARISH territory.
S’s current statistics gauge that the stock candle is BEARISH with LOW volatility. While LEN’s candle is BEARISH with HIGH.
EPS Growth Rate: S’s 5% versus LEN’s 23.97%
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 Sprint Corporation (NYSE:S) is predicted at 5% while Lennar Corporation (NYSE:LEN) stands at 23.97%. These numbers suggest that LEN 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 S stands at 1.2 while LEN is at 0 whereas the debt ratio of the prior is 1.46 while the debt ratio of the later is 0.83.
The values of the both ratios suggest that S 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 3.2 for S and 1.9 for LEN which means S has Sell rating whereas LEN 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 S is $5.78 which is -11.42% of its current price while LEN has price target of 64.41 which is 30.48% 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.
S currently has price to earning P/E ratio of 107.33 whereas LEN has 11.54 while the forward P/E ratio for the prior stands at 222.07 and for the later it depicts the value of 6.68.
The price to Book P/B for S is 0.93, Price to Sale is at 0.82 and for LEN these ratios stand at 1.07 and 0.93.