The shares of Zendesk, Inc. (NYSE:ZEN) and Alta Mesa Resources, Inc. (NASDAQ:AMR) were among the active stocks of the last trading sessions. Zendesk, Inc. (NYSE:ZEN) declined to -0.6% closing at the price of $63.29 whereas the shares of Alta Mesa Resources, Inc. (NASDAQ:AMR) soared 2.2% with the increase of 0.09 points closing at the price of $4.18. Zendesk, Inc. has currently increase 33.72% in its stock over the period of 6-months while its rival Alta Mesa Resources, Inc. subtracted -43.05% 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 Zendesk, Inc. (NYSE:ZEN) is -31.9% while the ROI of Alta Mesa Resources, Inc. (NASDAQ:AMR) is 0%. Another figure that is to be considered while analyzing the profitability of a share is its EBITDA margin, ZEN’s EBITDA Margin is -65.63 whereas AMR’s is NOT AVAILABLE.
Both the profitability ratios suggest that Alta Mesa Resources, Inc. (NASDAQ:AMR) is more suitable investment in terms of profitability and return.
EPS & Surprise Factor
Technical Analysis of Zendesk, Inc. & Alta Mesa Resources, Inc.
Moving average convergence divergence (MACD) shows that Zendesk, Inc. (NYSE:ZEN) is on a PRICE RELATIVITY trend While Alta Mesa Resources, Inc. (NASDAQ:AMR) is on PRICE RELATIVITY trend. The trend for the past 10-days shows that the Zendesk, Inc. was in BEARISH territory and Alta Mesa Resources, Inc. was in BEARISH territory.
ZEN’s current statistics gauge that the stock candle is BEARISH with HIGH volatility. While AMR’s candle is BULLISH with MEDIUM.
EPS Growth Rate: ZEN’s 28% versus AMR’s 0%
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 Zendesk, Inc. (NYSE:ZEN) is predicted at 28% while Alta Mesa Resources, Inc. (NASDAQ:AMR) stands at 0%. These numbers suggest that ZEN 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 ZEN stands at 2.7 while AMR is at 0.9 whereas the debt ratio of the prior is 1.1 while the debt ratio of the later is 0.4.
The values of the both ratios suggest that ZEN 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 1.8 for ZEN and 1.8 for AMR which means ZEN has Buy rating whereas AMR has Buy 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 ZEN is $71.5 which is 11.48% of its current price while AMR has price target of 8.68 which is 51.84% 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.
ZEN currently has price to earning P/E ratio of 0 whereas AMR has 0 while the forward P/E ratio for the prior stands at 190.63 and for the later it depicts the value of 7.74.
The price to Book P/B for ZEN is 16.4, Price to Sale is at 13.38 and for AMR these ratios stand at 0.46 and 4.2.