The shares of Summit Materials, Inc. (NYSE:SUM) and Albemarle Corporation (NYSE:ALB) were among the active stocks of the last trading sessions. Summit Materials, Inc. (NYSE:SUM) soared to 1.77% closing at the price of $17.23 whereas the shares of Albemarle Corporation (NYSE:ALB) declined -0.79% with the decrease of -0.81 points closing at the price of $102.25. Summit Materials, Inc. has currently decrease -41.57% in its stock over the period of 6-months while its rival Albemarle Corporation added 10.74% 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 Summit Materials, Inc. (NYSE:SUM) is 9.2% while the ROI of Albemarle Corporation (NYSE:ALB) is 10.4%. Another figure that is to be considered while analyzing the profitability of a share is its EBITDA margin, SUM’s EBITDA Margin is 9.11 whereas ALB’s is 12.82.
Both the profitability ratios suggest that Albemarle Corporation (NYSE:ALB) is more suitable investment in terms of profitability and return.
EPS & Surprise Factor
Summit Materials, Inc. (NYSE:SUM) reported $0.32/share EPS for the previous quarter where analysts were predicting an EPS to be $0.53/share Thus lagging the analyst Estimates with a Surprise Factor of -39.6 Percent. While, Albemarle Corporation (NYSE:ALB) reported EPS of $1.36/share in the last quarter. The analysts projected EPS of $1.28/share depicting a Surprise of 6.2 Percent.
Taking a look at Earnings per Share, Albemarle Corporation tends to be beating the analyst estimates more than Summit Materials, Inc.. so ALB is more profitable than SUM.
Technical Analysis of Summit Materials, Inc. & Albemarle Corporation
Moving average convergence divergence (MACD) shows that Summit Materials, Inc. (NYSE:SUM) is on a PRICE RELATIVITY trend While Albemarle Corporation (NYSE:ALB) is on PRICE RELATIVITY trend. The trend for the past 10-days shows that the Summit Materials, Inc. was in BEARISH territory and Albemarle Corporation was in BULLISH territory.
SUM’s current statistics gauge that the stock candle is BULLISH with HIGH volatility. While ALB’s candle is BEARISH with LOW.
EPS Growth Rate: SUM’s 26.12% versus ALB’s 12.7%
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 Summit Materials, Inc. (NYSE:SUM) is predicted at 26.12% while Albemarle Corporation (NYSE:ALB) stands at 12.7%. These numbers suggest that SUM 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 SUM stands at 2.1 while ALB is at 2.2 whereas the debt ratio of the prior is 1.45 while the debt ratio of the later is 0.44.
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 1.5 for SUM and 2 for ALB which means SUM has Buy rating whereas ALB 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 SUM is $29.58 which is 41.75% of its current price while ALB has price target of 126.5 which is 19.17% 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.
SUM currently has price to earning P/E ratio of 0 whereas ALB has 15.19 while the forward P/E ratio for the prior stands at 12.02 and for the later it depicts the value of 16.76.
The price to Book P/B for SUM is 1.52, Price to Sale is at 0.97 and for ALB these ratios stand at 3.04 and 3.41.