The shares of BP p.l.c. (NYSE:BP) and FirstEnergy Corporation (NYSE:FE) were among the active stocks of the last trading sessions. BP p.l.c. (NYSE:BP) declined to -0.58% closing at the price of $46.5 whereas the shares of FirstEnergy Corporation (NYSE:FE) soared 2.26% with the increase of 0.84 points closing at the price of $37.98. BP p.l.c. has currently increase 11.62% in its stock over the period of 6-months while its rival FirstEnergy Corporation added 11.25% 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 BP p.l.c. (NYSE:BP) is 2.1% while the ROI of FirstEnergy Corporation (NYSE:FE) is -2.9%. Another figure that is to be considered while analyzing the profitability of a share is its EBITDA margin, BP’s EBITDA Margin is 6.38 whereas FE’s is 8.63.
Both the profitability ratios suggest a mixed sentiment for BP p.l.c. (NYSE:BP) and FirstEnergy Corporation (NYSE:FE).
EPS & Surprise Factor
BP p.l.c. (NYSE:BP) reported $0.85/share EPS for the previous quarter where analysts were predicting an EPS to be $0.83/share Thus beating the analyst Estimates with a Surprise Factor of 2.4 Percent. While, FirstEnergy Corporation (NYSE:FE) reported EPS of $0.62/share in the last quarter. The analysts projected EPS of $0.53/share depicting a Surprise of 17 Percent.
Taking a look at Earnings per Share, FirstEnergy Corporation tends to be beating the analyst estimates more than BP p.l.c.. so FE is more profitable than BP.
Technical Analysis of BP p.l.c. & FirstEnergy Corporation
Moving average convergence divergence (MACD) shows that BP p.l.c. (NYSE:BP) is on a PRICE RELATIVITY trend While FirstEnergy Corporation (NYSE:FE) is on PRICE RELATIVITY trend. The trend for the past 10-days shows that the BP p.l.c. was in BULLISH territory and FirstEnergy Corporation was in BULLISH territory.
BP’s current statistics gauge that the stock candle is BEARISH with LOW volatility. While FE’s candle is BULLISH with HIGH.
EPS Growth Rate: BP’s 32% versus FE’s -6.92%
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 BP p.l.c. (NYSE:BP) is predicted at 32% while FirstEnergy Corporation (NYSE:FE) stands at -6.92%. These numbers suggest that BP 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 BP stands at 1.1 while FE is at 0.5 whereas the debt ratio of the prior is 0.6 while the debt ratio of the later is 2.55.
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 2.5 for BP and 2.1 for FE which means BP has Hold rating whereas FE 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 BP is $50.45 which is 7.83% of its current price while FE has price target of 39.47 which is 3.78% 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.
BP currently has price to earning P/E ratio of 19.26 whereas FE has 0 while the forward P/E ratio for the prior stands at 12.87 and for the later it depicts the value of 15.27.
The price to Book P/B for BP is 1.55, Price to Sale is at 0.57 and for FE these ratios stand at 2.4 and 1.41.