The shares of T-Mobile US, Inc. (NASDAQ:TMUS) and Gevo, Inc. (NASDAQ:GEVO) were among the active stocks of the last trading sessions. T-Mobile US, Inc. (NASDAQ:TMUS) soared to 0.34% closing at the price of $68.82 whereas the shares of Gevo, Inc. (NASDAQ:GEVO) soared 12.53% with the increase of 0.49 points closing at the price of $4.4. T-Mobile US, Inc. has currently increase 9.01% in its stock over the period of 6-months while its rival Gevo, Inc. subtracted -50.57% 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 T-Mobile US, Inc. (NASDAQ:TMUS) is 7.6% while the ROI of Gevo, Inc. (NASDAQ:GEVO) is -36.8%. Another figure that is to be considered while analyzing the profitability of a share is its EBITDA margin, TMUS’s EBITDA Margin is 7.97 whereas GEVO’s is -1.25.
Both the profitability ratios suggest that T-Mobile US, Inc. (NASDAQ:TMUS) is more suitable investment in terms of profitability and return.
EPS & Surprise Factor
T-Mobile US, Inc. (NASDAQ:TMUS) reported $0.92/share EPS for the previous quarter where analysts were predicting an EPS to be $0.87/share Thus beating the analyst Estimates with a Surprise Factor of 5.7 Percent. While, Gevo, Inc. (NASDAQ:GEVO) reported EPS of $-7.19/share in the last quarter. The analysts projected EPS of $-5.8/share depicting a Surprise of -24 Percent.
Taking a look at Earnings per Share, T-Mobile US, Inc. tends to be beating the analyst estimates more than Gevo, Inc.. so TMUS is more profitable than GEVO.
Technical Analysis of T-Mobile US, Inc. & Gevo, Inc.
Moving average convergence divergence (MACD) shows that T-Mobile US, Inc. (NASDAQ:TMUS) is on a PRICE RELATIVITY trend While Gevo, Inc. (NASDAQ:GEVO) is on PRICE RELATIVITY trend. The trend for the past 10-days shows that the T-Mobile US, Inc. was in BEARISH territory and Gevo, Inc. was in BULLISH territory.
TMUS’s current statistics gauge that the stock candle is BEARISH with MEDIUM volatility. While GEVO’s candle is BULLISH with MEDIUM.
EPS Growth Rate: TMUS’s -4.5% versus GEVO’s 25%
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 T-Mobile US, Inc. (NASDAQ:TMUS) is predicted at -4.5% while Gevo, Inc. (NASDAQ:GEVO) stands at 25%. These numbers suggest that GEVO 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 TMUS stands at 0.8 while GEVO is at 11.1 whereas the debt ratio of the prior is 1.31 while the debt ratio of the later is 0.
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 TMUS and 2 for GEVO which means TMUS has Buy rating whereas GEVO has Buy 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 TMUS is $77.65 which is 11.37% of its current price while GEVO has price target of 10 which is 56% 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.
TMUS currently has price to earning P/E ratio of 23.89 whereas GEVO has 0 while the forward P/E ratio for the prior stands at 17.3 and for the later it depicts the value of 0.
The price to Book P/B for TMUS is 2.49, Price to Sale is at 1.4 and for GEVO these ratios stand at 0.07 and 1.13.