The shares of Activision Blizzard, Inc (NASDAQ:ATVI) and Lowe’s Companies, Inc. (NYSE:LOW) were among the active stocks of the last trading sessions. Activision Blizzard, Inc (NASDAQ:ATVI) declined to -0.96% closing at the price of $79.59 whereas the shares of Lowe’s Companies, Inc. (NYSE:LOW) declined -0.94% with the decrease of -1.04 points closing at the price of $109.74. Activision Blizzard, Inc has currently increase 21.01% in its stock over the period of 6-months while its rival Lowe’s Companies, Inc. added 28.74% 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 Activision Blizzard, Inc (NASDAQ:ATVI) is 7.6% while the ROI of Lowe’s Companies, Inc. (NYSE:LOW) is 17.9%. Another figure that is to be considered while analyzing the profitability of a share is its EBITDA margin, ATVI’s EBITDA Margin is 27.48 whereas LOW’s is 13.22.
Both the profitability ratios suggest a mixed sentiment for Activision Blizzard, Inc (NASDAQ:ATVI) and Lowe’s Companies, Inc. (NYSE:LOW).
EPS & Surprise Factor
Activision Blizzard, Inc (NASDAQ:ATVI) reported $0.41/share EPS for the previous quarter where analysts were predicting an EPS to be $0.35/share Thus beating the analyst Estimates with a Surprise Factor of 17.1 Percent. While, Lowe’s Companies, Inc. (NYSE:LOW) reported EPS of $2.07/share in the last quarter. The analysts projected EPS of $2.02/share depicting a Surprise of 2.5 Percent.
Taking a look at Earnings per Share, Activision Blizzard, Inc tends to be beating the analyst estimates more than Lowe’s Companies, Inc.. so ATVI is more profitable than LOW.
Technical Analysis of Activision Blizzard, Inc & Lowe’s Companies, Inc.
Moving average convergence divergence (MACD) shows that Activision Blizzard, Inc (NASDAQ:ATVI) is on a PRICE RELATIVITY trend While Lowe’s Companies, Inc. (NYSE:LOW) is on PRICE RELATIVITY trend. The trend for the past 10-days shows that the Activision Blizzard, Inc was in BEARISH territory and Lowe’s Companies, Inc. was in BEARISH territory.
ATVI’s current statistics gauge that the stock candle is BEARISH with MEDIUM volatility. While LOW’s candle is BEARISH with HIGH.
EPS Growth Rate: ATVI’s 14.9% versus LOW’s 15.2%
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 Activision Blizzard, Inc (NASDAQ:ATVI) is predicted at 14.9% while Lowe’s Companies, Inc. (NYSE:LOW) stands at 15.2%. These numbers suggest that LOW 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 ATVI stands at 3 while LOW is at 1.1 whereas the debt ratio of the prior is 0 while the debt ratio of the later is 2.74.
The values of the both ratios suggest that one is more liquid and other investment is more risk free.
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 ATVI and 1.9 for LOW which means ATVI has Buy rating whereas LOW 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 ATVI is $81.15 which is 1.92% of its current price while LOW has price target of 121.04 which is 9.34% 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.
ATVI currently has price to earning P/E ratio of 53.6 whereas LOW has 22.91 while the forward P/E ratio for the prior stands at 26.16 and for the later it depicts the value of 18.26.
The price to Book P/B for ATVI is 5.85, Price to Sale is at 8.43 and for LOW these ratios stand at 15.43 and 1.27.