The shares of Verizon Communications Inc. (NYSE:VZ) and Pandora Media, Inc. (NYSE:P) were among the active stocks of the last trading sessions. Verizon Communications Inc. (NYSE:VZ) declined to -0.15% closing at the price of $54.94 whereas the shares of Pandora Media, Inc. (NYSE:P) declined -0.22% with the decrease of -0.02 points closing at the price of $8.95. Verizon Communications Inc. has currently increase 17.09% in its stock over the period of 6-months while its rival Pandora Media, Inc. added 88.82% 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 Verizon Communications Inc. (NYSE:VZ) is 11.6% while the ROI of Pandora Media, Inc. (NYSE:P) is -116%. Another figure that is to be considered while analyzing the profitability of a share is its EBITDA margin, VZ’s EBITDA Margin is 7.31 whereas P’s is -10.3.
Both the profitability ratios suggest that Verizon Communications Inc. (NYSE:VZ) is more suitable investment in terms of profitability and return.
EPS & Surprise Factor
Verizon Communications Inc. (NYSE:VZ) reported $1.2/share EPS for the previous quarter where analysts were predicting an EPS to be $1.14/share Thus beating the analyst Estimates with a Surprise Factor of 5.3 Percent. While, Pandora Media, Inc. (NYSE:P) reported EPS of $-0.15/share in the last quarter. The analysts projected EPS of $-0.16/share depicting a Surprise of 6.3 Percent.
Taking a look at Earnings per Share, Pandora Media, Inc. tends to be beating the analyst estimates more than Verizon Communications Inc.. so P is more profitable than VZ.
Technical Analysis of Verizon Communications Inc. & Pandora Media, Inc.
Moving average convergence divergence (MACD) shows that Verizon Communications Inc. (NYSE:VZ) is on a PRICE RELATIVITY trend While Pandora Media, Inc. (NYSE:P) is on PRICE RELATIVITY trend. The trend for the past 10-days shows that the Verizon Communications Inc. was in BULLISH territory and Pandora Media, Inc. was in BEARISH territory.
VZ’s current statistics gauge that the stock candle is BEARISH with MEDIUM volatility. While P’s candle is BULLISH with MEDIUM.
EPS Growth Rate: VZ’s 5.99% versus P’s 10%
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 Verizon Communications Inc. (NYSE:VZ) is predicted at 5.99% while Pandora Media, Inc. (NYSE:P) stands at 10%. These numbers suggest that P 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 VZ stands at 1 while P is at 2.7 whereas the debt ratio of the prior is 2.2 while the debt ratio of the later is 2.76.
The values of the both ratios suggest that P 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 2.4 for VZ and 2.7 for P which means VZ has Hold rating whereas P 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 VZ is $56.58 which is 2.9% of its current price while P has price target of 9.46 which is 5.39% 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.
VZ currently has price to earning P/E ratio of 15.95 whereas P has 0 while the forward P/E ratio for the prior stands at 11.58 and for the later it depicts the value of 0.
The price to Book P/B for VZ is 4.37, Price to Sale is at 1.75 and for P these ratios stand at 25.57 and 1.62.