The shares of Novartis AG (NYSE:NVS) and Anadarko Petroleum Corporation (NYSE:APC) were among the active stocks of the last trading sessions. Novartis AG (NYSE:NVS) declined to -0.21% closing at the price of $85.08 whereas the shares of Anadarko Petroleum Corporation (NYSE:APC) soared 1.93% with the increase of 1.34 points closing at the price of $70.61. Novartis AG has currently increase 5.15% in its stock over the period of 6-months while its rival Anadarko Petroleum Corporation added 11.72% 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 Novartis AG (NYSE:NVS) is 7.1% while the ROI of Anadarko Petroleum Corporation (NYSE:APC) is -1.4%. Another figure that is to be considered while analyzing the profitability of a share is its EBITDA margin, NVS’s EBITDA Margin is 13.86 whereas APC’s is 11.09.
Both the profitability ratios suggest that Novartis AG (NYSE:NVS) is more suitable investment in terms of profitability and return.
EPS & Surprise Factor
Novartis AG (NYSE:NVS) reported $1.29/share EPS for the previous quarter where analysts were predicting an EPS to be $1.27/share Thus beating the analyst Estimates with a Surprise Factor of 1.6 Percent. While, Anadarko Petroleum Corporation (NYSE:APC) reported EPS of $0.54/share in the last quarter. The analysts projected EPS of $0.56/share depicting a Surprise of -3.6 Percent.
Taking a look at Earnings per Share, Novartis AG tends to be beating the analyst estimates more than Anadarko Petroleum Corporation. so NVS is more profitable than APC.
Technical Analysis of Novartis AG & Anadarko Petroleum Corporation
Moving average convergence divergence (MACD) shows that Novartis AG (NYSE:NVS) is on a PRICE RELATIVITY trend While Anadarko Petroleum Corporation (NYSE:APC) is on PRICE RELATIVITY trend. The trend for the past 10-days shows that the Novartis AG was in BEARISH territory and Anadarko Petroleum Corporation was in BULLISH territory.
NVS’s current statistics gauge that the stock candle is BULLISH with MEDIUM volatility. While APC’s candle is BULLISH with MEDIUM.
EPS Growth Rate: NVS’s 7.23% versus APC’s 12%
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 Novartis AG (NYSE:NVS) is predicted at 7.23% while Anadarko Petroleum Corporation (NYSE:APC) stands at 12%. These numbers suggest that APC 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 NVS stands at 1.1 while APC is at 0.9 whereas the debt ratio of the prior is 0.42 while the debt ratio of the later is 1.83.
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 for NVS and 1.9 for APC which means NVS has Strong Buy rating whereas APC 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 NVS is $98.5 which is 13.62% of its current price while APC has price target of 85.5 which is 17.42% 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.
NVS currently has price to earning P/E ratio of 14.5 whereas APC has 0 while the forward P/E ratio for the prior stands at 15.29 and for the later it depicts the value of 17.84.
The price to Book P/B for NVS is 2.58, Price to Sale is at 4.17 and for APC these ratios stand at 4 and 3.04.