The shares of Salesforce.com Inc (NYSE:CRM) and Range Resources Corporation (NYSE:RRC) were among the active stocks of the last trading sessions. Salesforce.com Inc (NYSE:CRM) declined to -4.14% closing at the price of $148.65 whereas the shares of Range Resources Corporation (NYSE:RRC) soared 2.81% with the increase of 0.49 points closing at the price of $17.91. Salesforce.com Inc has currently increase 24.4% in its stock over the period of 6-months while its rival Range Resources Corporation added 21.18% 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 Salesforce.com Inc (NYSE:CRM) is 2.8% while the ROI of Range Resources Corporation (NYSE:RRC) is -0.4%. Another figure that is to be considered while analyzing the profitability of a share is its EBITDA margin, CRM’s EBITDA Margin is 107.3 whereas RRC’s is 8.89.
Both the profitability ratios suggest that Salesforce.com Inc (NYSE:CRM) is more suitable investment in terms of profitability and return.
EPS & Surprise Factor
Salesforce.com Inc (NYSE:CRM) reported $0.71/share EPS for the previous quarter where analysts were predicting an EPS to be $0.47/share Thus beating the analyst Estimates with a Surprise Factor of 51.1 Percent. While, Range Resources Corporation (NYSE:RRC) reported EPS of $0.2/share in the last quarter. The analysts projected EPS of $0.11/share depicting a Surprise of 81.8 Percent.
Taking a look at Earnings per Share, Range Resources Corporation tends to be beating the analyst estimates more than Salesforce.com Inc. so RRC is more profitable than CRM.
Technical Analysis of Salesforce.com Inc & Range Resources Corporation
Moving average convergence divergence (MACD) shows that Salesforce.com Inc (NYSE:CRM) is on a PRICE RELATIVITY trend While Range Resources Corporation (NYSE:RRC) is on PRICE RELATIVITY trend. The trend for the past 10-days shows that the Salesforce.com Inc was in BEARISH territory and Range Resources Corporation was in BULLISH territory.
CRM’s current statistics gauge that the stock candle is BEARISH with HIGH volatility. While RRC’s candle is BULLISH with MEDIUM.
EPS Growth Rate: CRM’s 30.7% versus RRC’s 60.33%
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 Salesforce.com Inc (NYSE:CRM) is predicted at 30.7% while Range Resources Corporation (NYSE:RRC) stands at 60.33%. These numbers suggest that RRC 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 CRM stands at 0.8 while RRC is at 0.5 whereas the debt ratio of the prior is 0.33 while the debt ratio of the later is 0.73.
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 1.7 for CRM and 2.4 for RRC which means CRM has Buy rating whereas RRC 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 CRM is $171.72 which is 13.43% of its current price while RRC has price target of 20.94 which is 14.47% 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.
CRM currently has price to earning P/E ratio of 116.22 whereas RRC has 0 while the forward P/E ratio for the prior stands at 54.47 and for the later it depicts the value of 16.08.
The price to Book P/B for CRM is 8.21, Price to Sale is at 9.51 and for RRC these ratios stand at 0.76 and 1.63.