The shares of GDS Holdings Limited (NASDAQ:GDS) and Abercrombie & Fitch Company (NYSE:ANF) were among the active stocks of the last trading sessions. GDS Holdings Limited (NASDAQ:GDS) declined to -1.85% closing at the price of $25.93 whereas the shares of Abercrombie & Fitch Company (NYSE:ANF) declined -1.72% with the decrease of -0.34 points closing at the price of $19.44. GDS Holdings Limited has currently increase 4.26% in its stock over the period of 6-months while its rival Abercrombie & Fitch Company subtracted -30.84% 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 GDS Holdings Limited (NASDAQ:GDS) is 0.8% while the ROI of Abercrombie & Fitch Company (NYSE:ANF) is 3.2%. Another figure that is to be considered while analyzing the profitability of a share is its EBITDA margin, GDS’s EBITDA Margin is 48.11 whereas ANF’s is 3.14.
Both the profitability ratios suggest a mixed sentiment for GDS Holdings Limited (NASDAQ:GDS) and Abercrombie & Fitch Company (NYSE:ANF).
EPS & Surprise Factor
GDS Holdings Limited (NASDAQ:GDS) reported $-0.12/share EPS for the previous quarter where analysts were predicting an EPS to be $-0.09/share Thus lagging the analyst Estimates with a Surprise Factor of -33.3 Percent. While, Abercrombie & Fitch Company (NYSE:ANF) reported EPS of $0.06/share in the last quarter. The analysts projected EPS of $-0.04/share depicting a Surprise of 250 Percent.
Taking a look at Earnings per Share, Abercrombie & Fitch Company tends to be beating the analyst estimates more than GDS Holdings Limited. so ANF is more profitable than GDS.
Technical Analysis of GDS Holdings Limited & Abercrombie & Fitch Company
Moving average convergence divergence (MACD) shows that GDS Holdings Limited (NASDAQ:GDS) is on a PRICE RELATIVITY trend While Abercrombie & Fitch Company (NYSE:ANF) is on PRICE RELATIVITY trend. The trend for the past 10-days shows that the GDS Holdings Limited was in BEARISH territory and Abercrombie & Fitch Company was in BEARISH territory.
GDS’s current statistics gauge that the stock candle is BEARISH with HIGH volatility. While ANF’s candle is BEARISH with LOW.
EPS Growth Rate: GDS’s 0% versus ANF’s 18%
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 GDS Holdings Limited (NASDAQ:GDS) is predicted at 0% while Abercrombie & Fitch Company (NYSE:ANF) stands at 18%. These numbers suggest that ANF 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 GDS stands at 1.5 while ANF is at 2.2 whereas the debt ratio of the prior is 2.06 while the debt ratio of the later is 0.
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 2.1 for GDS and 3.1 for ANF which means GDS has Hold rating whereas ANF 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 GDS is $42.69 which is 39.26% of its current price while ANF has price target of 22.83 which is 14.85% 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.
GDS currently has price to earning P/E ratio of 0 whereas ANF has 23.62 while the forward P/E ratio for the prior stands at 0 and for the later it depicts the value of 19.86.
The price to Book P/B for GDS is 3.91, Price to Sale is at 10.92 and for ANF these ratios stand at 1.16 and 0.36.