The shares of PayPal Holdings, Inc. (NASDAQ:PYPL) and Verizon Communications Inc. (NYSE:VZ) were among the active stocks of the last trading sessions. PayPal Holdings, Inc. (NASDAQ:PYPL) declined to -3.16% closing at the price of $80.55 whereas the shares of Verizon Communications Inc. (NYSE:VZ) soared 0.15% with the increase of 0.08 points closing at the price of $55.02. PayPal Holdings, Inc. has currently increase 4.9% in its stock over the period of 6-months while its rival Verizon Communications Inc. added 13.98% 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 PayPal Holdings, Inc. (NASDAQ:PYPL) is 11.2% while the ROI of Verizon Communications Inc. (NYSE:VZ) is 11.6%. Another figure that is to be considered while analyzing the profitability of a share is its EBITDA margin, PYPL’s EBITDA Margin is 34.14 whereas VZ’s is 7.31.
Both the profitability ratios suggest a mixed sentiment for PayPal Holdings, Inc. (NASDAQ:PYPL) and Verizon Communications Inc. (NYSE:VZ).
EPS & Surprise Factor
PayPal Holdings, Inc. (NASDAQ:PYPL) reported $0.58/share EPS for the previous quarter where analysts were predicting an EPS to be $0.57/share Thus beating the analyst Estimates with a Surprise Factor of 1.8 Percent. While, Verizon Communications Inc. (NYSE:VZ) reported EPS of $1.2/share in the last quarter. The analysts projected EPS of $1.14/share depicting a Surprise of 5.3 Percent.
Taking a look at Earnings per Share, Verizon Communications Inc. tends to be beating the analyst estimates more than PayPal Holdings, Inc.. so VZ is more profitable than PYPL.
Technical Analysis of PayPal Holdings, Inc. & Verizon Communications Inc.
Moving average convergence divergence (MACD) shows that PayPal Holdings, Inc. (NASDAQ:PYPL) is on a PRICE RELATIVITY trend While Verizon Communications Inc. (NYSE:VZ) is on PRICE RELATIVITY trend. The trend for the past 10-days shows that the PayPal Holdings, Inc. was in BEARISH territory and Verizon Communications Inc. was in BULLISH territory.
PYPL’s current statistics gauge that the stock candle is BEARISH with HIGH volatility. While VZ’s candle is BULLISH with MEDIUM.
EPS Growth Rate: PYPL’s 19.76% versus VZ’s 5.99%
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 PayPal Holdings, Inc. (NASDAQ:PYPL) is predicted at 19.76% while Verizon Communications Inc. (NYSE:VZ) stands at 5.99%. These numbers suggest that PYPL 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 PYPL stands at 1.4 while VZ is at 1 whereas the debt ratio of the prior is 0.13 while the debt ratio of the later is 2.2.
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 1.9 for PYPL and 2.4 for VZ which means PYPL has Buy rating whereas VZ 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 PYPL is $97.98 which is 17.79% of its current price while VZ has price target of 56.58 which is 2.76% 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.
PYPL currently has price to earning P/E ratio of 43.59 whereas VZ has 15.98 while the forward P/E ratio for the prior stands at 28.39 and for the later it depicts the value of 11.6.
The price to Book P/B for PYPL is 6.37, Price to Sale is at 6.66 and for VZ these ratios stand at 4.37 and 1.76.