The shares of Dana Incorporated (NYSE:DAN) and Automatic Data Processing, Inc. (NASDAQ:ADP) were among the active stocks of the last trading sessions. Dana Incorporated (NYSE:DAN) soared to 2.36% closing at the price of $18.18 whereas the shares of Automatic Data Processing, Inc. (NASDAQ:ADP) declined -1.12% with the decrease of -1.69 points closing at the price of $149.3. Dana Incorporated has currently decrease -31.47% in its stock over the period of 6-months while its rival Automatic Data Processing, Inc. added 28.81% 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 Dana Incorporated (NYSE:DAN) is 13.3% while the ROI of Automatic Data Processing, Inc. (NASDAQ:ADP) is 30.1%. Another figure that is to be considered while analyzing the profitability of a share is its EBITDA margin, DAN’s EBITDA Margin is 5.18 whereas ADP’s is 22.61.
Both the profitability ratios suggest that Automatic Data Processing, Inc. (NASDAQ:ADP) is more suitable investment in terms of profitability and return.
EPS & Surprise Factor
Dana Incorporated (NYSE:DAN) reported $0.74/share EPS for the previous quarter where analysts were predicting an EPS to be $0.78/share Thus lagging the analyst Estimates with a Surprise Factor of -5.1 Percent. While, Automatic Data Processing, Inc. (NASDAQ:ADP) reported EPS of $0.92/share in the last quarter. The analysts projected EPS of $0.9/share depicting a Surprise of 2.2 Percent.
Taking a look at Earnings per Share, Automatic Data Processing, Inc. tends to be beating the analyst estimates more than Dana Incorporated. so ADP is more profitable than DAN.
Technical Analysis of Dana Incorporated & Automatic Data Processing, Inc.
Moving average convergence divergence (MACD) shows that Dana Incorporated (NYSE:DAN) is on a PRICE RELATIVITY trend While Automatic Data Processing, Inc. (NASDAQ:ADP) is on PRICE RELATIVITY trend. The trend for the past 10-days shows that the Dana Incorporated was in BEARISH territory and Automatic Data Processing, Inc. was in BULLISH territory.
DAN’s current statistics gauge that the stock candle is BULLISH with MEDIUM volatility. While ADP’s candle is BEARISH with MEDIUM.
EPS Growth Rate: DAN’s 7.1% versus ADP’s 14.6%
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 Dana Incorporated (NYSE:DAN) is predicted at 7.1% while Automatic Data Processing, Inc. (NASDAQ:ADP) stands at 14.6%. These numbers suggest that ADP 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 DAN stands at 1.6 while ADP is at 1.1 whereas the debt ratio of the prior is 1.58 while the debt ratio of the later is 0.58.
The values of the both ratios suggest that DAN 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 2.6 for DAN and 2.5 for ADP which means DAN has Hold rating whereas ADP 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 DAN is $24.75 which is 26.55% of its current price while ADP has price target of 153.06 which is 2.46% 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.
DAN currently has price to earning P/E ratio of 7.04 whereas ADP has 40.83 while the forward P/E ratio for the prior stands at 5.69 and for the later it depicts the value of 25.17.
The price to Book P/B for DAN is 2.3, Price to Sale is at 0.35 and for ADP these ratios stand at 18.9 and 4.91.