The shares of Take-Two Interactive Software, Inc. (NASDAQ:TTWO) and Party City Holdco Inc. (NYSE:PRTY) were among the active stocks of the last trading sessions. Take-Two Interactive Software, Inc. (NASDAQ:TTWO) declined to -2.89% closing at the price of $126.82 whereas the shares of Party City Holdco Inc. (NYSE:PRTY) declined -3.04% with the decrease of -0.38 points closing at the price of $12.13. Take-Two Interactive Software, Inc. has currently increase 29.89% in its stock over the period of 6-months while its rival Party City Holdco Inc. subtracted -22.24% 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 Take-Two Interactive Software, Inc. (NASDAQ:TTWO) is 12.3% while the ROI of Party City Holdco Inc. (NYSE:PRTY) is 7.8%. Another figure that is to be considered while analyzing the profitability of a share is its EBITDA margin, TTWO’s EBITDA Margin is 58.76 whereas PRTY’s is 8.09.
Both the profitability ratios suggest that Take-Two Interactive Software, Inc. (NASDAQ:TTWO) is more suitable investment in terms of profitability and return.
EPS & Surprise Factor
Take-Two Interactive Software, Inc. (NASDAQ:TTWO) reported $0.12/share EPS for the previous quarter where analysts were predicting an EPS to be $0.07/share Thus beating the analyst Estimates with a Surprise Factor of 71.4 Percent. While, Party City Holdco Inc. (NYSE:PRTY) reported EPS of $0.4/share in the last quarter. The analysts projected EPS of $0.39/share depicting a Surprise of 2.6 Percent.
Taking a look at Earnings per Share, Take-Two Interactive Software, Inc. tends to be beating the analyst estimates more than Party City Holdco Inc.. so TTWO is more profitable than PRTY.
Technical Analysis of Take-Two Interactive Software, Inc. & Party City Holdco Inc.
Moving average convergence divergence (MACD) shows that Take-Two Interactive Software, Inc. (NASDAQ:TTWO) is on a PRICE RELATIVITY trend While Party City Holdco Inc. (NYSE:PRTY) is on PRICE RELATIVITY trend. The trend for the past 10-days shows that the Take-Two Interactive Software, Inc. was in BEARISH territory and Party City Holdco Inc. was in BEARISH territory.
TTWO’s current statistics gauge that the stock candle is BEARISH with HIGH volatility. While PRTY’s candle is BEARISH with HIGH.
EPS Growth Rate: TTWO’s 27.37% versus PRTY’s 21.68%
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 Take-Two Interactive Software, Inc. (NASDAQ:TTWO) is predicted at 27.37% while Party City Holdco Inc. (NYSE:PRTY) stands at 21.68%. These numbers suggest that TTWO 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 TTWO stands at 1.5 while PRTY is at 1.3 whereas the debt ratio of the prior is 0 while the debt ratio of the later is 1.93.
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 1.8 for TTWO and 2.2 for PRTY which means TTWO has Buy rating whereas PRTY 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 TTWO is $137.95 which is 8.07% of its current price while PRTY has price target of 18.39 which is 34.04% 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.
TTWO currently has price to earning P/E ratio of 76.44 whereas PRTY has 10.33 while the forward P/E ratio for the prior stands at 24.89 and for the later it depicts the value of 5.89.
The price to Book P/B for TTWO is 7.73, Price to Sale is at 8.27 and for PRTY these ratios stand at 1.18 and 0.48.