The shares of Avon Products, Inc. (NYSE:AVP) and Omnicom Group Inc. (NYSE:OMC) were among the active stocks of the last trading sessions. Avon Products, Inc. (NYSE:AVP) soared to 2.55% closing at the price of $2.01 whereas the shares of Omnicom Group Inc. (NYSE:OMC) declined -0.9% with the decrease of -0.65 points closing at the price of $71.7. Avon Products, Inc. has currently decrease -28.21% in its stock over the period of 6-months while its rival Omnicom Group Inc. subtracted -0.46% 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 Avon Products, Inc. (NYSE:AVP) is 12.6% while the ROI of Omnicom Group Inc. (NYSE:OMC) is 19.5%. Another figure that is to be considered while analyzing the profitability of a share is its EBITDA margin, AVP’s EBITDA Margin is 5.6 whereas OMC’s is 8.5.
Both the profitability ratios suggest that Omnicom Group Inc. (NYSE:OMC) is more suitable investment in terms of profitability and return.
EPS & Surprise Factor
Technical Analysis of Avon Products, Inc. & Omnicom Group Inc.
Moving average convergence divergence (MACD) shows that Avon Products, Inc. (NYSE:AVP) is on a PRICE RELATIVITY trend While Omnicom Group Inc. (NYSE:OMC) is on PRICE RELATIVITY trend. The trend for the past 10-days shows that the Avon Products, Inc. was in BEARISH territory and Omnicom Group Inc. was in BULLISH territory.
AVP’s current statistics gauge that the stock candle is BULLISH with HIGH volatility. While OMC’s candle is BEARISH with HIGH.
EPS Growth Rate: AVP’s 5% versus OMC’s 7.03%
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 Avon Products, Inc. (NYSE:AVP) is predicted at 5% while Omnicom Group Inc. (NYSE:OMC) stands at 7.03%. These numbers suggest that OMC 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 AVP stands at 1.3 while OMC is at 0.9 whereas the debt ratio of the prior is 0 while the debt ratio of the later is 2.11.
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 2.5 for AVP and 3.1 for OMC which means AVP has Hold rating whereas OMC has Sell 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 AVP is $2.41 which is 16.6% of its current price while OMC has price target of 73.53 which is 2.49% 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.
AVP currently has price to earning P/E ratio of 67 whereas OMC has 13.23 while the forward P/E ratio for the prior stands at 11.75 and for the later it depicts the value of 12.4.
The price to Book P/B for AVP is 0, Price to Sale is at 0.16 and for OMC these ratios stand at 7 and 1.04.