The shares of Amazon.com, Inc. (NASDAQ:AMZN) and Roku, Inc. (NASDAQ:ROKU) were among the active stocks of the last trading sessions. Amazon.com, Inc. (NASDAQ:AMZN) declined to -1.34% closing at the price of $1864.42 whereas the shares of Roku, Inc. (NASDAQ:ROKU) declined -1.94% with the decrease of -1.3 points closing at the price of $65.64. Amazon.com, Inc. has currently increase 29.81% in its stock over the period of 6-months while its rival Roku, Inc. added 103.41% 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 Amazon.com, Inc. (NASDAQ:AMZN) is 3.5% while the ROI of Roku, Inc. (NASDAQ:ROKU) is -14.6%. Another figure that is to be considered while analyzing the profitability of a share is its EBITDA margin, AMZN’s EBITDA Margin is 45.58 whereas ROKU’s is 30116.2.
Both the profitability ratios suggest a mixed sentiment for Amazon.com, Inc. (NASDAQ:AMZN) and Roku, Inc. (NASDAQ:ROKU).
EPS & Surprise Factor
Amazon.com, Inc. (NASDAQ:AMZN) reported $5.07/share EPS for the previous quarter where analysts were predicting an EPS to be $2.54/share Thus beating the analyst Estimates with a Surprise Factor of 99.6 Percent. While, Roku, Inc. (NASDAQ:ROKU) reported EPS of $0/share in the last quarter. The analysts projected EPS of $-0.15/share depicting a Surprise of 100 Percent.
Taking a look at Earnings per Share, Roku, Inc. tends to be beating the analyst estimates more than Amazon.com, Inc.. so ROKU is more profitable than AMZN.
Technical Analysis of Amazon.com, Inc. & Roku, Inc.
Moving average convergence divergence (MACD) shows that Amazon.com, Inc. (NASDAQ:AMZN) is on a PRICE RELATIVITY trend While Roku, Inc. (NASDAQ:ROKU) is on PRICE RELATIVITY trend. The trend for the past 10-days shows that the Amazon.com, Inc. was in BEARISH territory and Roku, Inc. was in BEARISH territory.
AMZN’s current statistics gauge that the stock candle is BEARISH with HIGH volatility. While ROKU’s candle is BEARISH with HIGH.
EPS Growth Rate: AMZN’s 56.76% versus ROKU’s 21%
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 Amazon.com, Inc. (NASDAQ:AMZN) is predicted at 56.76% while Roku, Inc. (NASDAQ:ROKU) stands at 21%. These numbers suggest that AMZN 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 AMZN stands at 1.1 while ROKU is at 2.4 whereas the debt ratio of the prior is 1.31 while the debt ratio of the later is 0.
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 1.7 for AMZN and 2.2 for ROKU which means AMZN has Buy rating whereas ROKU 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 AMZN is $2136.67 which is 12.74% of its current price while ROKU has price target of 66.73 which is 1.63% 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.
AMZN currently has price to earning P/E ratio of 169.32 whereas ROKU has 0 while the forward P/E ratio for the prior stands at 73.59 and for the later it depicts the value of 0.
The price to Book P/B for AMZN is 25.89, Price to Sale is at 4.41 and for ROKU these ratios stand at 31.86 and 11.46.