The shares of H&R Block, Inc. (NYSE:HRB) and American Express Company (NYSE:AXP) were among the active stocks of the last trading sessions. H&R Block, Inc. (NYSE:HRB) soared to 4.21% closing at the price of $26.51 whereas the shares of American Express Company (NYSE:AXP) declined -0.22% with the decrease of -0.24 points closing at the price of $106.99. H&R Block, Inc. has currently increase 2.83% in its stock over the period of 6-months while its rival American Express Company added 15.04% 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 H&R Block, Inc. (NYSE:HRB) is 37.6% while the ROI of American Express Company (NYSE:AXP) is 3.7%. Another figure that is to be considered while analyzing the profitability of a share is its EBITDA margin, HRB’s EBITDA Margin is 6.09 whereas AXP’s is NOT AVAILABLE.
Both the profitability ratios suggest a mixed sentiment for H&R Block, Inc. (NYSE:HRB) and American Express Company (NYSE:AXP).
EPS & Surprise Factor
H&R Block, Inc. (NYSE:HRB) reported $-0.72/share EPS for the previous quarter where analysts were predicting an EPS to be $-0.77/share Thus beating the analyst Estimates with a Surprise Factor of 6.5 Percent. While, American Express Company (NYSE:AXP) reported EPS of $1.84/share in the last quarter. The analysts projected EPS of $1.82/share depicting a Surprise of 1.1 Percent.
Taking a look at Earnings per Share, H&R Block, Inc. tends to be beating the analyst estimates more than American Express Company. so HRB is more profitable than AXP.
Technical Analysis of H&R Block, Inc. & American Express Company
Moving average convergence divergence (MACD) shows that H&R Block, Inc. (NYSE:HRB) is on a PRICE RELATIVITY trend While American Express Company (NYSE:AXP) is on PRICE RELATIVITY trend. The trend for the past 10-days shows that the H&R Block, Inc. was in BULLISH territory and American Express Company was in BEARISH territory.
HRB’s current statistics gauge that the stock candle is BULLISH with HIGH volatility. While AXP’s candle is BULLISH with LOW.
EPS Growth Rate: HRB’s 10% versus AXP’s 11.8%
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 H&R Block, Inc. (NYSE:HRB) is predicted at 10% while American Express Company (NYSE:AXP) stands at 11.8%. These numbers suggest that AXP 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 HRB stands at 2.3 while AXP is at 0 whereas the debt ratio of the prior is 7.79 while the debt ratio of the later is 5.99.
The values of the both ratios suggest that HRB 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 2.8 for HRB and 2.3 for AXP which means HRB has Hold rating whereas AXP 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 HRB is $25.43 which is -4.25% of its current price while AXP has price target of 114.27 which is 6.37% 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.
HRB currently has price to earning P/E ratio of 9.67 whereas AXP has 15.69 while the forward P/E ratio for the prior stands at 12.88 and for the later it depicts the value of 13.31.
The price to Book P/B for HRB is 28.82, Price to Sale is at 1.74 and for AXP these ratios stand at 4.4 and 2.43.