The shares of Welltower Inc. (NYSE:WELL) and Embraer S.A. (NYSE:ERJ) were among the active stocks of the last trading sessions. Welltower Inc. (NYSE:WELL) soared to 1.54% closing at the price of $63.2 whereas the shares of Embraer S.A. (NYSE:ERJ) soared 2.41% with the increase of 0.48 points closing at the price of $20.38. Welltower Inc. has currently increase 17.04% in its stock over the period of 6-months while its rival Embraer S.A. subtracted -22.02% 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 Welltower Inc. (NYSE:WELL) is 3% while the ROI of Embraer S.A. (NYSE:ERJ) is 3.6%. Another figure that is to be considered while analyzing the profitability of a share is its EBITDA margin, WELL’s EBITDA Margin is 18.05 whereas ERJ’s is 22.95.
Both the profitability ratios suggest that Embraer S.A. (NYSE:ERJ) is more suitable investment in terms of profitability and return.
EPS & Surprise Factor
Welltower Inc. (NYSE:WELL) reported $0.41/share EPS for the previous quarter where analysts were predicting an EPS to be $0.43/share Thus lagging the analyst Estimates with a Surprise Factor of -4.7 Percent. While, Embraer S.A. (NYSE:ERJ) reported EPS of $-0.69/share in the last quarter. The analysts projected EPS of $0.21/share depicting a Surprise of -428.6 Percent.
Taking a look at Earnings per Share, Welltower Inc. tends to be beating the analyst estimates more than Embraer S.A.. so WELL is more profitable than ERJ.
Technical Analysis of Welltower Inc. & Embraer S.A.
Moving average convergence divergence (MACD) shows that Welltower Inc. (NYSE:WELL) is on a PRICE RELATIVITY trend While Embraer S.A. (NYSE:ERJ) is on PRICE RELATIVITY trend. The trend for the past 10-days shows that the Welltower Inc. was in BEARISH territory and Embraer S.A. was in BULLISH territory.
WELL’s current statistics gauge that the stock candle is BULLISH with MEDIUM volatility. While ERJ’s candle is BEARISH with HIGH.
EPS Growth Rate: WELL’s 16.7% versus ERJ’s 8.66%
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 Welltower Inc. (NYSE:WELL) is predicted at 16.7% while Embraer S.A. (NYSE:ERJ) stands at 8.66%. These numbers suggest that WELL 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 WELL stands at 0 while ERJ is at 2.4 whereas the debt ratio of the prior is 0.84 while the debt ratio of the later is 1.04.
The values of the both ratios suggest that ERJ 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 2.6 for WELL and 2.6 for ERJ which means WELL has Hold rating whereas ERJ 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 WELL is $64.84 which is 2.53% of its current price while ERJ has price target of 24.65 which is 17.32% 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.
WELL currently has price to earning P/E ratio of 160.41 whereas ERJ has 0 while the forward P/E ratio for the prior stands at 35.77 and for the later it depicts the value of 17.63.
The price to Book P/B for WELL is 1.72, Price to Sale is at 5.32 and for ERJ these ratios stand at 0.96 and 0.86.