The shares of J P Morgan Chase & Co (NYSE:JPM) and Transocean Ltd. (NYSE:RIG) were among the active stocks of the last trading sessions. J P Morgan Chase & Co (NYSE:JPM) soared to 0.61% closing at the price of $115.32 whereas the shares of Transocean Ltd. (NYSE:RIG) soared 2.27% with the increase of 0.31 points closing at the price of $13.97. J P Morgan Chase & Co has currently increase 2.5% in its stock over the period of 6-months while its rival Transocean Ltd. added 32.92% 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 J P Morgan Chase & Co (NYSE:JPM) is 6.9% while the ROI of Transocean Ltd. (NYSE:RIG) is -12.9%. Another figure that is to be considered while analyzing the profitability of a share is its EBITDA margin, JPM’s EBITDA Margin is NOT AVAILABLE whereas RIG’s is 12.46.
Both the profitability ratios suggest that J P Morgan Chase & Co (NYSE:JPM) is more suitable investment in terms of profitability and return.
EPS & Surprise Factor
J P Morgan Chase & Co (NYSE:JPM) reported $2.29/share EPS for the previous quarter where analysts were predicting an EPS to be $2.22/share Thus beating the analyst Estimates with a Surprise Factor of 3.2 Percent. While, Transocean Ltd. (NYSE:RIG) reported EPS of $-0.04/share in the last quarter. The analysts projected EPS of $-0.17/share depicting a Surprise of 76.5 Percent.
Taking a look at Earnings per Share, Transocean Ltd. tends to be beating the analyst estimates more than J P Morgan Chase & Co. so RIG is more profitable than JPM.
Technical Analysis of J P Morgan Chase & Co & Transocean Ltd.
Moving average convergence divergence (MACD) shows that J P Morgan Chase & Co (NYSE:JPM) is on a PRICE RELATIVITY trend While Transocean Ltd. (NYSE:RIG) is on PRICE RELATIVITY trend. The trend for the past 10-days shows that the J P Morgan Chase & Co was in BEARISH territory and Transocean Ltd. was in BULLISH territory.
JPM’s current statistics gauge that the stock candle is BULLISH with MEDIUM volatility. While RIG’s candle is BULLISH with LOW.
EPS Growth Rate: JPM’s 6.39% versus RIG’s 0%
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 J P Morgan Chase & Co (NYSE:JPM) is predicted at 6.39% while Transocean Ltd. (NYSE:RIG) stands at 0%. These numbers suggest that JPM 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 JPM stands at 0 while RIG is at 1.5 whereas the debt ratio of the prior is 1.18 while the debt ratio of the later is 0.78.
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 2.2 for JPM and 2.6 for RIG which means JPM has Hold rating whereas RIG 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 JPM is $121.65 which is 5.2% of its current price while RIG has price target of 14.13 which is 1.13% 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.
JPM currently has price to earning P/E ratio of 14.35 whereas RIG has 0 while the forward P/E ratio for the prior stands at 11.54 and for the later it depicts the value of 0.
The price to Book P/B for JPM is 1.7, Price to Sale is at 5.55 and for RIG these ratios stand at 0.52 and 2.24.