The shares of Kroger Company (The) (NYSE:KR) and American International Group, Inc. (NYSE:AIG) were among the active stocks of the last trading sessions. Kroger Company (The) (NYSE:KR) soared to 0.96% closing at the price of $29.35 whereas the shares of American International Group, Inc. (NYSE:AIG) soared 0.84% with the increase of 0.45 points closing at the price of $54.05. Kroger Company (The) has currently increase 25.11% in its stock over the period of 6-months while its rival American International Group, Inc. added 0.99% 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 Kroger Company (The) (NYSE:KR) is 7% while the ROI of American International Group, Inc. (NYSE:AIG) is 1.9%. Another figure that is to be considered while analyzing the profitability of a share is its EBITDA margin, KR’s EBITDA Margin is 7.4 whereas AIG’s is 9.73.
Both the profitability ratios suggest a mixed sentiment for Kroger Company (The) (NYSE:KR) and American International Group, Inc. (NYSE:AIG).
EPS & Surprise Factor
Kroger Company (The) (NYSE:KR) reported $0.41/share EPS for the previous quarter where analysts were predicting an EPS to be $0.38/share Thus beating the analyst Estimates with a Surprise Factor of 7.9 Percent. While, American International Group, Inc. (NYSE:AIG) reported EPS of $1.05/share in the last quarter. The analysts projected EPS of $1.21/share depicting a Surprise of -13.2 Percent.
Taking a look at Earnings per Share, Kroger Company (The) tends to be beating the analyst estimates more than American International Group, Inc.. so KR is more profitable than AIG.
Technical Analysis of Kroger Company (The) & American International Group, Inc.
Moving average convergence divergence (MACD) shows that Kroger Company (The) (NYSE:KR) is on a PRICE RELATIVITY trend While American International Group, Inc. (NYSE:AIG) is on PRICE RELATIVITY trend. The trend for the past 10-days shows that the Kroger Company (The) was in BEARISH territory and American International Group, Inc. was in BEARISH territory.
KR’s current statistics gauge that the stock candle is BULLISH with LOW volatility. While AIG’s candle is BULLISH with LOW.
EPS Growth Rate: KR’s 6.47% versus AIG’s 34.55%
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 Kroger Company (The) (NYSE:KR) is predicted at 6.47% while American International Group, Inc. (NYSE:AIG) stands at 34.55%. These numbers suggest that AIG 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 KR stands at 0.7 while AIG is at 0 whereas the debt ratio of the prior is 1.97 while the debt ratio of the later is 0.55.
The values of the both ratios suggest that KR 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 2.4 for KR and 2.2 for AIG which means KR has Hold rating whereas AIG 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 KR is $30.77 which is 4.61% of its current price while AIG has price target of 62.07 which is 12.92% 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.
KR currently has price to earning P/E ratio of 8.77 whereas AIG has 314.24 while the forward P/E ratio for the prior stands at 13.1 and for the later it depicts the value of 9.98.
The price to Book P/B for KR is 3.17, Price to Sale is at 0.19 and for AIG these ratios stand at 0.8 and 1.01.