The shares of Edison International (NYSE:EIX) and Hormel Foods Corporation (NYSE:HRL) were among the active stocks of the last trading sessions. Edison International (NYSE:EIX) soared to 0.74% closing at the price of $70.45 whereas the shares of Hormel Foods Corporation (NYSE:HRL) soared 0.47% with the increase of 0.19 points closing at the price of $40.72. Edison International has currently increase 11.63% in its stock over the period of 6-months while its rival Hormel Foods Corporation added 15.16% 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 Edison International (NYSE:EIX) is 6.4% while the ROI of Hormel Foods Corporation (NYSE:HRL) is 16.4%. Another figure that is to be considered while analyzing the profitability of a share is its EBITDA margin, EIX’s EBITDA Margin is 9.83 whereas HRL’s is 17.
Both the profitability ratios suggest that Hormel Foods Corporation (NYSE:HRL) is more suitable investment in terms of profitability and return.
EPS & Surprise Factor
Edison International (NYSE:EIX) reported $0.84/share EPS for the previous quarter where analysts were predicting an EPS to be $0.83/share Thus beating the analyst Estimates with a Surprise Factor of 1.2 Percent. While, Hormel Foods Corporation (NYSE:HRL) reported EPS of $0.39/share in the last quarter. The analysts projected EPS of $0.39/share depicting a Surprise of 0 Percent.
Taking a look at Earnings per Share, Edison International tends to be beating the analyst estimates more than Hormel Foods Corporation. so EIX is more profitable than HRL.
Technical Analysis of Edison International & Hormel Foods Corporation
Moving average convergence divergence (MACD) shows that Edison International (NYSE:EIX) is on a PRICE RELATIVITY trend While Hormel Foods Corporation (NYSE:HRL) is on PRICE RELATIVITY trend. The trend for the past 10-days shows that the Edison International was in BULLISH territory and Hormel Foods Corporation was in BULLISH territory.
EIX’s current statistics gauge that the stock candle is BULLISH with HIGH volatility. While HRL’s candle is BULLISH with MEDIUM.
EPS Growth Rate: EIX’s 3.44% versus HRL’s 10.5%
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 Edison International (NYSE:EIX) is predicted at 3.44% while Hormel Foods Corporation (NYSE:HRL) stands at 10.5%. These numbers suggest that HRL 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 EIX stands at 0.7 while HRL is at 1.7 whereas the debt ratio of the prior is 1.24 while the debt ratio of the later is 0.13.
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 2.4 for EIX and 2.8 for HRL which means EIX has Hold rating whereas HRL 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 EIX is $71 which is 0.77% of its current price while HRL has price target of 36.92 which is -10.29% 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.
EIX currently has price to earning P/E ratio of 26.08 whereas HRL has 24.52 while the forward P/E ratio for the prior stands at 15.62 and for the later it depicts the value of 22.12.
The price to Book P/B for EIX is 1.95, Price to Sale is at 1.87 and for HRL these ratios stand at 4.01 and 2.28.