Which Stock Worth Selling? Graphic Packaging Holding Company (GPK) or Avon Products, Inc. (AVP)

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The shares of Graphic Packaging Holding Company (NYSE:GPK) and Avon Products, Inc. (NYSE:AVP) were among the active stocks of the last trading sessions. Graphic Packaging Holding Company (NYSE:GPK) declined to -1.81% closing at the price of $13.53 whereas the shares of Avon Products, Inc. (NYSE:AVP) soared 1.55% with the increase of 0.03 points closing at the price of $1.96. Graphic Packaging Holding Company has currently decrease -14.2% in its stock over the period of 6-months while its rival Avon Products, Inc. subtracted -31.71% 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 Graphic Packaging Holding Company (NYSE:GPK) is 7.1% while the ROI of Avon Products, Inc. (NYSE:AVP) is 12.6%. Another figure that is to be considered while analyzing the profitability of a share is its EBITDA margin, GPK’s EBITDA Margin is 9.78 whereas AVP’s is 5.6.

Both the profitability ratios suggest a mixed sentiment for Graphic Packaging Holding Company (NYSE:GPK) and Avon Products, Inc. (NYSE:AVP).

EPS & Surprise Factor
Technical Analysis of Graphic Packaging Holding Company & Avon Products, Inc.

Moving average convergence divergence (MACD) shows that Graphic Packaging Holding Company (NYSE:GPK) is on a PRICE RELATIVITY trend While Avon Products, Inc. (NYSE:AVP) is on PRICE RELATIVITY trend. The trend for the past 10-days shows that the Graphic Packaging Holding Company was in BEARISH territory and Avon Products, Inc. was in BEARISH territory.

GPK’s current statistics gauge that the stock candle is BEARISH with MEDIUM volatility. While AVP’s candle is BULLISH with HIGH.

EPS Growth Rate: GPK’s 23.68% versus AVP’s 5%

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 Graphic Packaging Holding Company (NYSE:GPK) is predicted at 23.68% while Avon Products, Inc. (NYSE:AVP) stands at 5%. These numbers suggest that GPK 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 GPK stands at 1.8 while AVP is at 1.3 whereas the debt ratio of the prior is 1.74 while the debt ratio of the later is 0.

The values of the both ratios suggest that GPK is more suitable investment when the liquidity and risk is the main concern.

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 1.8 for GPK and 2.5 for AVP which means GPK has Buy rating whereas AVP 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 GPK is $18.08 which is 25.17% of its current price while AVP has price target of 2.41 which is 18.67% 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.

GPK currently has price to earning P/E ratio of 25.62 whereas AVP has 65.33 while the forward P/E ratio for the prior stands at 12.38 and for the later it depicts the value of 11.46.

The price to Book P/B for GPK is 2.46, Price to Sale is at 0.81 and for AVP these ratios stand at 0 and 0.16.