The shares of RPM International Inc. (NYSE:RPM) and UnitedHealth Group Incorporated (NYSE:UNH) were among the active stocks of the last trading sessions. RPM International Inc. (NYSE:RPM) declined to -2.18% closing at the price of $59.24 whereas the shares of UnitedHealth Group Incorporated (NYSE:UNH) soared 0.41% with the increase of 1.1 points closing at the price of $270.11. RPM International Inc. has currently increase 21.44% in its stock over the period of 6-months while its rival UnitedHealth Group Incorporated added 21.73% 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 RPM International Inc. (NYSE:RPM) is 11.3% while the ROI of UnitedHealth Group Incorporated (NYSE:UNH) is 13.6%. Another figure that is to be considered while analyzing the profitability of a share is its EBITDA margin, RPM’s EBITDA Margin is 15.24 whereas UNH’s is 15.28.
Both the profitability ratios suggest that UnitedHealth Group Incorporated (NYSE:UNH) is more suitable investment in terms of profitability and return.
EPS & Surprise Factor
RPM International Inc. (NYSE:RPM) reported $0.76/share EPS for the previous quarter where analysts were predicting an EPS to be $0.88/share Thus lagging the analyst Estimates with a Surprise Factor of -13.6 Percent. While, UnitedHealth Group Incorporated (NYSE:UNH) reported EPS of $3.14/share in the last quarter. The analysts projected EPS of $3.04/share depicting a Surprise of 3.3 Percent.
Taking a look at Earnings per Share, UnitedHealth Group Incorporated tends to be beating the analyst estimates more than RPM International Inc.. so UNH is more profitable than RPM.
Technical Analysis of RPM International Inc. & UnitedHealth Group Incorporated
Moving average convergence divergence (MACD) shows that RPM International Inc. (NYSE:RPM) is on a PRICE RELATIVITY trend While UnitedHealth Group Incorporated (NYSE:UNH) is on PRICE RELATIVITY trend. The trend for the past 10-days shows that the RPM International Inc. was in BEARISH territory and UnitedHealth Group Incorporated was in BULLISH territory.
RPM’s current statistics gauge that the stock candle is BEARISH with HIGH volatility. While UNH’s candle is BULLISH with MEDIUM.
EPS Growth Rate: RPM’s 8.17% versus UNH’s 15.37%
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 RPM International Inc. (NYSE:RPM) is predicted at 8.17% while UnitedHealth Group Incorporated (NYSE:UNH) stands at 15.37%. These numbers suggest that UNH 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 RPM stands at 2.8 while UNH is at 0 whereas the debt ratio of the prior is 1.41 while the debt ratio of the later is 0.73.
The values of the both ratios suggest that RPM 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 2.5 for RPM and 1.6 for UNH which means RPM has Hold rating whereas UNH 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 RPM is $67.89 which is 12.74% of its current price while UNH has price target of 292.33 which is 7.6% 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.
RPM currently has price to earning P/E ratio of 25.79 whereas UNH has 25.01 while the forward P/E ratio for the prior stands at 15.93 and for the later it depicts the value of 18.75.
The price to Book P/B for RPM is 4.85, Price to Sale is at 1.45 and for UNH these ratios stand at 5.38 and 1.21.