The shares of JD.com, Inc. (NASDAQ:JD) and Gerdau S.A. (NYSE:GGB) were among the active stocks of the last trading sessions. JD.com, Inc. (NASDAQ:JD) soared to 1.14% closing at the price of $23.89 whereas the shares of Gerdau S.A. (NYSE:GGB) soared 1.47% with the increase of 0.06 points closing at the price of $4.15. JD.com, Inc. has currently decrease -41.3% in its stock over the period of 6-months while its rival Gerdau S.A. subtracted -10.24% 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 JD.com, Inc. (NASDAQ:JD) is -1.3% while the ROI of Gerdau S.A. (NYSE:GGB) is 1.9%. Another figure that is to be considered while analyzing the profitability of a share is its EBITDA margin, JD’s EBITDA Margin is 103.73 whereas GGB’s is 8.11.
Both the profitability ratios suggest a mixed sentiment for JD.com, Inc. (NASDAQ:JD) and Gerdau S.A. (NYSE:GGB).
EPS & Surprise Factor
JD.com, Inc. (NASDAQ:JD) reported $0.05/share EPS for the previous quarter where analysts were predicting an EPS to be $0.1/share Thus lagging the analyst Estimates with a Surprise Factor of -50 Percent. While, Gerdau S.A. (NYSE:GGB) reported EPS of $-0.04/share in the last quarter. The analysts projected EPS of $-0.02/share depicting a Surprise of -100 Percent.
Taking a look at Earnings per Share, JD.com, Inc. tends to be beating the analyst estimates more than Gerdau S.A.. so JD is more profitable than GGB.
Technical Analysis of JD.com, Inc. & Gerdau S.A.
Moving average convergence divergence (MACD) shows that JD.com, Inc. (NASDAQ:JD) is on a PRICE RELATIVITY trend While Gerdau S.A. (NYSE:GGB) is on PRICE RELATIVITY trend. The trend for the past 10-days shows that the JD.com, Inc. was in BEARISH territory and Gerdau S.A. was in BEARISH territory.
JD’s current statistics gauge that the stock candle is BULLISH with HIGH volatility. While GGB’s candle is BEARISH with MEDIUM.
EPS Growth Rate: JD’s 8.14% versus GGB’s 25.43%
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 JD.com, Inc. (NASDAQ:JD) is predicted at 8.14% while Gerdau S.A. (NYSE:GGB) stands at 25.43%. These numbers suggest that GGB 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 JD stands at 1 while GGB is at 2.4 whereas the debt ratio of the prior is 0.37 while the debt ratio of the later is 0.76.
The values of the both ratios suggest that GGB 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 2.3 for JD and 1.7 for GGB which means JD has Hold rating whereas GGB 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 JD is $39.53 which is 39.56% of its current price while GGB has price target of 5.42 which is 23.43% 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.
JD currently has price to earning P/E ratio of 0 whereas GGB has 0 while the forward P/E ratio for the prior stands at 28.41 and for the later it depicts the value of 10.25.
The price to Book P/B for JD is 4.04, Price to Sale is at 0.58 and for GGB these ratios stand at 1.08 and 0.63.