The shares of Devon Energy Corporation (NYSE:DVN) and Target Corporation (NYSE:TGT) were among the active stocks of the last trading sessions. Devon Energy Corporation (NYSE:DVN) declined to -0.25% closing at the price of $40.04 whereas the shares of Target Corporation (NYSE:TGT) declined -0.38% with the decrease of -0.32 points closing at the price of $84.52. Devon Energy Corporation has currently increase 27.23% in its stock over the period of 6-months while its rival Target Corporation added 18.24% 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 Devon Energy Corporation (NYSE:DVN) is 9.5% while the ROI of Target Corporation (NYSE:TGT) is 13.2%. Another figure that is to be considered while analyzing the profitability of a share is its EBITDA margin, DVN’s EBITDA Margin is 10.14 whereas TGT’s is 8.54.
Both the profitability ratios suggest a mixed sentiment for Devon Energy Corporation (NYSE:DVN) and Target Corporation (NYSE:TGT).
EPS & Surprise Factor
Devon Energy Corporation (NYSE:DVN) reported $0.34/share EPS for the previous quarter where analysts were predicting an EPS to be $0.36/share Thus lagging the analyst Estimates with a Surprise Factor of -5.6 Percent. While, Target Corporation (NYSE:TGT) reported EPS of $1.47/share in the last quarter. The analysts projected EPS of $1.4/share depicting a Surprise of 5 Percent.
Taking a look at Earnings per Share, Target Corporation tends to be beating the analyst estimates more than Devon Energy Corporation. so TGT is more profitable than DVN.
Technical Analysis of Devon Energy Corporation & Target Corporation
Moving average convergence divergence (MACD) shows that Devon Energy Corporation (NYSE:DVN) is on a PRICE RELATIVITY trend While Target Corporation (NYSE:TGT) is on PRICE RELATIVITY trend. The trend for the past 10-days shows that the Devon Energy Corporation was in BEARISH territory and Target Corporation was in BEARISH territory.
DVN’s current statistics gauge that the stock candle is BEARISH with LOW volatility. While TGT’s candle is BEARISH with HIGH.
EPS Growth Rate: DVN’s 77.99% versus TGT’s 7.5%
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 Devon Energy Corporation (NYSE:DVN) is predicted at 77.99% while Target Corporation (NYSE:TGT) stands at 7.5%. These numbers suggest that DVN 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 DVN stands at 1.6 while TGT is at 0.8 whereas the debt ratio of the prior is 0.76 while the debt ratio of the later is 1.
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 2.1 for DVN and 2.7 for TGT which means DVN has Hold rating whereas TGT 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 DVN is $51.57 which is 22.36% of its current price while TGT has price target of 89.01 which is 5.04% 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.
DVN currently has price to earning P/E ratio of 0 whereas TGT has 16.92 while the forward P/E ratio for the prior stands at 14.8 and for the later it depicts the value of 15.01.
The price to Book P/B for DVN is 2.57, Price to Sale is at 1.76 and for TGT these ratios stand at 4.02 and 0.6.