The shares of Alphabet Inc. (NASDAQ:GOOGL) and Sears Holdings Corporation (NASDAQ:SHLD) were among the active stocks of the last trading sessions. Alphabet Inc. (NASDAQ:GOOGL) declined to -0.93% closing at the price of $1145.17 whereas the shares of Sears Holdings Corporation (NASDAQ:SHLD) declined -5.99% with the decrease of -0.03 points closing at the price of $0.59. Alphabet Inc. has currently increase 11.72% in its stock over the period of 6-months while its rival Sears Holdings Corporation subtracted -82.27% 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 Alphabet Inc. (NASDAQ:GOOGL) is 13.7% while the ROI of Sears Holdings Corporation (NASDAQ:SHLD) is -74.4%. Another figure that is to be considered while analyzing the profitability of a share is its EBITDA margin, GOOGL’s EBITDA Margin is 18.69 whereas SHLD’s is -4.76.
Both the profitability ratios suggest that Alphabet Inc. (NASDAQ:GOOGL) is more suitable investment in terms of profitability and return.
EPS & Surprise Factor
Alphabet Inc. (NASDAQ:GOOGL) reported $4.54/share EPS for the previous quarter where analysts were predicting an EPS to be $9.59/share Thus lagging the analyst Estimates with a Surprise Factor of -52.7 Percent. While, Sears Holdings Corporation (NASDAQ:SHLD) reported EPS of $-4.62/share in the last quarter. The analysts projected EPS of $-1.51/share depicting a Surprise of -206 Percent.
Taking a look at Earnings per Share, Alphabet Inc. tends to be beating the analyst estimates more than Sears Holdings Corporation. so GOOGL is more profitable than SHLD.
Technical Analysis of Alphabet Inc. & Sears Holdings Corporation
Moving average convergence divergence (MACD) shows that Alphabet Inc. (NASDAQ:GOOGL) is on a PRICE RELATIVITY trend While Sears Holdings Corporation (NASDAQ:SHLD) is on PRICE RELATIVITY trend. The trend for the past 10-days shows that the Alphabet Inc. was in BEARISH territory and Sears Holdings Corporation was in BEARISH territory.
GOOGL’s current statistics gauge that the stock candle is BEARISH with HIGH volatility. While SHLD’s candle is BEARISH with HIGH.
EPS Growth Rate: GOOGL’s 17.37% versus SHLD’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 Alphabet Inc. (NASDAQ:GOOGL) is predicted at 17.37% while Sears Holdings Corporation (NASDAQ:SHLD) stands at 0%. These numbers suggest that GOOGL 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 GOOGL stands at 4.2 while SHLD is at 0.9 whereas the debt ratio of the prior is 0 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 1.7 for GOOGL and 4 for SHLD which means GOOGL has Buy rating whereas SHLD 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 GOOGL is $1386.29 which is 17.39% of its current price while SHLD has price target of 2 which is 70.5% 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.
GOOGL currently has price to earning P/E ratio of 30.75 whereas SHLD has 0 while the forward P/E ratio for the prior stands at 23.78 and for the later it depicts the value of 0.
The price to Book P/B for GOOGL is 4.91, Price to Sale is at 6.46 and for SHLD these ratios stand at 0 and 0.01.