The shares of Arcos Dorados Holdings Inc. (NYSE:ARCO) and Prospect Capital Corporation (NASDAQ:PSEC) were among the active stocks of the last trading sessions. Arcos Dorados Holdings Inc. (NYSE:ARCO) soared to 6.06% closing at the price of $6.83 whereas the shares of Prospect Capital Corporation (NASDAQ:PSEC) declined -0.14% with the decrease of -0.01 points closing at the price of $7.07. Arcos Dorados Holdings Inc. has currently decrease -21.94% in its stock over the period of 6-months while its rival Prospect Capital Corporation added 7.94% 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 Arcos Dorados Holdings Inc. (NYSE:ARCO) is 19.5% while the ROI of Prospect Capital Corporation (NASDAQ:PSEC) is 4.9%. Another figure that is to be considered while analyzing the profitability of a share is its EBITDA margin, ARCO’s EBITDA Margin is 9.26 whereas PSEC’s is NOT AVAILABLE.
Both the profitability ratios suggest a mixed sentiment for Arcos Dorados Holdings Inc. (NYSE:ARCO) and Prospect Capital Corporation (NASDAQ:PSEC).
EPS & Surprise Factor
Arcos Dorados Holdings Inc. (NYSE:ARCO) reported $0.05/share EPS for the previous quarter where analysts were predicting an EPS to be $0.04/share Thus beating the analyst Estimates with a Surprise Factor of 25 Percent. While, Prospect Capital Corporation (NASDAQ:PSEC) reported EPS of $0.22/share in the last quarter. The analysts projected EPS of $0.2/share depicting a Surprise of 10 Percent.
Taking a look at Earnings per Share, Arcos Dorados Holdings Inc. tends to be beating the analyst estimates more than Prospect Capital Corporation. so ARCO is more profitable than PSEC.
Technical Analysis of Arcos Dorados Holdings Inc. & Prospect Capital Corporation
Moving average convergence divergence (MACD) shows that Arcos Dorados Holdings Inc. (NYSE:ARCO) is on a PRICE RELATIVITY trend While Prospect Capital Corporation (NASDAQ:PSEC) is on PRICE RELATIVITY trend. The trend for the past 10-days shows that the Arcos Dorados Holdings Inc. was in BULLISH territory and Prospect Capital Corporation was in BEARISH territory.
ARCO’s current statistics gauge that the stock candle is BULLISH with MEDIUM volatility. While PSEC’s candle is BEARISH with HIGH.
EPS Growth Rate: ARCO’s 11.9% versus PSEC’s 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 Arcos Dorados Holdings Inc. (NYSE:ARCO) is predicted at 11.9% while Prospect Capital Corporation (NASDAQ:PSEC) stands at 5%. These numbers suggest that ARCO 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 ARCO stands at 1.1 while PSEC is at 0 whereas the debt ratio of the prior is 1.62 while the debt ratio of the later is 0.68.
The values of the both ratios suggest that ARCO 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 1.8 for ARCO and 3.5 for PSEC which means ARCO has Buy rating whereas PSEC has Sell 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 ARCO is $10.95 which is 37.63% of its current price while PSEC has price target of 6 which is -17.83% 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.
ARCO currently has price to earning P/E ratio of 15.38 whereas PSEC has 8.53 while the forward P/E ratio for the prior stands at 15.74 and for the later it depicts the value of 8.25.
The price to Book P/B for ARCO is 3.63, Price to Sale is at 0.43 and for PSEC these ratios stand at 0.75 and 3.98.