The shares of Nucor Corporation (NYSE:NUE) and Carvana Co. (NYSE:CVNA) were among the active stocks of the last trading sessions. Nucor Corporation (NYSE:NUE) declined to -1.58% closing at the price of $63.7 whereas the shares of Carvana Co. (NYSE:CVNA) declined -2.7% with the decrease of -1.42 points closing at the price of $51.24. Nucor Corporation has currently increase 4.46% in its stock over the period of 6-months while its rival Carvana Co. added 125.93% 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 Nucor Corporation (NYSE:NUE) is 10.8% while the ROI of Carvana Co. (NYSE:CVNA) is -49.2%. Another figure that is to be considered while analyzing the profitability of a share is its EBITDA margin, NUE’s EBITDA Margin is 7.89 whereas CVNA’s is -14.64.
Both the profitability ratios suggest that Nucor Corporation (NYSE:NUE) is more suitable investment in terms of profitability and return.
EPS & Surprise Factor
Nucor Corporation (NYSE:NUE) reported $2.07/share EPS for the previous quarter where analysts were predicting an EPS to be $2.09/share Thus lagging the analyst Estimates with a Surprise Factor of -1 Percent. While, Carvana Co. (NYSE:CVNA) reported EPS of $-0.37/share in the last quarter. The analysts projected EPS of $-0.35/share depicting a Surprise of -5.7 Percent.
Taking a look at Earnings per Share, Nucor Corporation tends to be beating the analyst estimates more than Carvana Co.. so NUE is more profitable than CVNA.
Technical Analysis of Nucor Corporation & Carvana Co.
Moving average convergence divergence (MACD) shows that Nucor Corporation (NYSE:NUE) is on a PRICE RELATIVITY trend While Carvana Co. (NYSE:CVNA) is on PRICE RELATIVITY trend. The trend for the past 10-days shows that the Nucor Corporation was in BULLISH territory and Carvana Co. was in BEARISH territory.
NUE’s current statistics gauge that the stock candle is BEARISH with LOW volatility. While CVNA’s candle is BEARISH with MEDIUM.
EPS Growth Rate: NUE’s 11.57% versus CVNA’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 Nucor Corporation (NYSE:NUE) is predicted at 11.57% while Carvana Co. (NYSE:CVNA) stands at 0%. These numbers suggest that NUE 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 NUE stands at 3.1 while CVNA is at 1.5 whereas the debt ratio of the prior is 0.46 while the debt ratio of the later is 6.61.
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 1.9 for NUE and 1.9 for CVNA which means NUE has Buy rating whereas CVNA 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 NUE is $77.26 which is 17.55% of its current price while CVNA has price target of 61.15 which is 16.21% 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.
NUE currently has price to earning P/E ratio of 13.63 whereas CVNA has 0 while the forward P/E ratio for the prior stands at 9.73 and for the later it depicts the value of 0.
The price to Book P/B for NUE is 2.16, Price to Sale is at 0.91 and for CVNA these ratios stand at 21.8 and 5.36.