The shares of Alcoa Corporation (NYSE:AA) and Regions Financial Corporation (NYSE:RF) were among the active stocks of the last trading sessions. Alcoa Corporation (NYSE:AA) declined to -7.89% closing at the price of $38.74 whereas the shares of Regions Financial Corporation (NYSE:RF) soared 0.81% with the increase of 0.15 points closing at the price of $18.69. Alcoa Corporation has currently decrease -28.37% in its stock over the period of 6-months while its rival Regions Financial Corporation added 0.48% 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 Alcoa Corporation (NYSE:AA) is 10.6% while the ROI of Regions Financial Corporation (NYSE:RF) is 14.6%. Another figure that is to be considered while analyzing the profitability of a share is its EBITDA margin, AA’s EBITDA Margin is 3.99 whereas RF’s is NOT AVAILABLE.
Both the profitability ratios suggest that Regions Financial Corporation (NYSE:RF) is more suitable investment in terms of profitability and return.
EPS & Surprise Factor
Alcoa Corporation (NYSE:AA) reported $1.52/share EPS for the previous quarter where analysts were predicting an EPS to be $1.32/share Thus beating the analyst Estimates with a Surprise Factor of 15.2 Percent. While, Regions Financial Corporation (NYSE:RF) reported EPS of $0.32/share in the last quarter. The analysts projected EPS of $0.33/share depicting a Surprise of -3 Percent.
Taking a look at Earnings per Share, Alcoa Corporation tends to be beating the analyst estimates more than Regions Financial Corporation. so AA is more profitable than RF.
Technical Analysis of Alcoa Corporation & Regions Financial Corporation
Moving average convergence divergence (MACD) shows that Alcoa Corporation (NYSE:AA) is on a PRICE RELATIVITY trend While Regions Financial Corporation (NYSE:RF) is on PRICE RELATIVITY trend. The trend for the past 10-days shows that the Alcoa Corporation was in BULLISH territory and Regions Financial Corporation was in BEARISH territory.
AA’s current statistics gauge that the stock candle is BEARISH with HIGH volatility. While RF’s candle is BULLISH with MEDIUM.
EPS Growth Rate: AA’s 3.5% versus RF’s 9%
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 Alcoa Corporation (NYSE:AA) is predicted at 3.5% while Regions Financial Corporation (NYSE:RF) stands at 9%. These numbers suggest that RF 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 AA stands at 1.4 while RF is at 0 whereas the debt ratio of the prior is 0.38 while the debt ratio of the later is 0.32.
The values of the both ratios suggest that AA 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 2.1 for AA and 2.6 for RF which means AA has Hold rating whereas RF 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 AA is $58.31 which is 33.56% of its current price while RF has price target of 20.5 which is 8.83% 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.
AA currently has price to earning P/E ratio of 45.42 whereas RF has 15.21 while the forward P/E ratio for the prior stands at 9.67 and for the later it depicts the value of 11.85.
The price to Book P/B for AA is 1.43, Price to Sale is at 0.58 and for RF these ratios stand at 1.4 and 4.99.