Which Company’s Stock is more Profitable? Lamb Weston Holdings, Inc. (LW) or Companhia Brasileira de Distribuicao (CBD)

The shares of Lamb Weston Holdings, Inc. (NYSE:LW) and Companhia Brasileira de Distribuicao (NYSE:CBD) were among the active stocks of the last trading sessions. Lamb Weston Holdings, Inc. (NYSE:LW) declined to -0.95% closing at the price of $73.99 whereas the shares of Companhia Brasileira de Distribuicao (NYSE:CBD) soared 2.12% with the increase of 0.46 points closing at the price of $22.13. Lamb Weston Holdings, Inc. has currently increase 16.03% in its stock over the period of 6-months while its rival Companhia Brasileira de Distribuicao added 12.39% 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 Lamb Weston Holdings, Inc. (NYSE:LW) is 18.8% while the ROI of Companhia Brasileira de Distribuicao (NYSE:CBD) is 8.2%. Another figure that is to be considered while analyzing the profitability of a share is its EBITDA margin, LW’s EBITDA Margin is 17.79 whereas CBD’s is 8.81.

Both the profitability ratios suggest that Lamb Weston Holdings, Inc. (NYSE:LW) is more suitable investment in terms of profitability and return.

EPS & Surprise Factor

Lamb Weston Holdings, Inc. (NYSE:LW) reported $0.73/share EPS for the previous quarter where analysts were predicting an EPS to be $0.68/share Thus beating the analyst Estimates with a Surprise Factor of 7.4 Percent. While, Companhia Brasileira de Distribuicao (NYSE:CBD) reported EPS of $0.16/share in the last quarter. The analysts projected EPS of $0.16/share depicting a Surprise of 0 Percent.

Taking a look at Earnings per Share, Lamb Weston Holdings, Inc. tends to be beating the analyst estimates more than Companhia Brasileira de Distribuicao. so LW is more profitable than CBD.

Technical Analysis of Lamb Weston Holdings, Inc. & Companhia Brasileira de Distribuicao

Moving average convergence divergence (MACD) shows that Lamb Weston Holdings, Inc. (NYSE:LW) is on a PRICE RELATIVITY trend While Companhia Brasileira de Distribuicao (NYSE:CBD) is on PRICE RELATIVITY trend. The trend for the past 10-days shows that the Lamb Weston Holdings, Inc. was in BULLISH territory and Companhia Brasileira de Distribuicao was in BULLISH territory.

LW’s current statistics gauge that the stock candle is BEARISH with HIGH volatility. While CBD’s candle is BEARISH with MEDIUM.

EPS Growth Rate: LW’s 8.95% versus CBD’s 7.6%

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 Lamb Weston Holdings, Inc. (NYSE:LW) is predicted at 8.95% while Companhia Brasileira de Distribuicao (NYSE:CBD) stands at 7.6%. These numbers suggest that LW 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 LW stands at 1.9 while CBD is at 1.2 whereas the debt ratio of the prior is 0 while the debt ratio of the later is 0.56.

The values of the both ratios suggest that one is more liquid and other investment is more risk free.

Analyst Recommendations

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 2.1 for LW and 1.7 for CBD which means LW has Hold rating whereas CBD 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 LW is $74.21 which is 0.3% of its current price while CBD has price target of 26.67 which is 17.02% of its current price.

Valuation Ratios

Valuation is the process of determining the company’s worth for an investor, the valuation ratios give an insight to that worthiness.

LW currently has price to earning P/E ratio of 29.81 whereas CBD has 46.89 while the forward P/E ratio for the prior stands at 22.63 and for the later it depicts the value of 18.21.

The price to Book P/B for LW is 0, Price to Sale is at 3.08 and for CBD these ratios stand at 2.13 and 0.49.