The shares of American Express Company (NYSE:AXP) and Wendy’s Company (The) (NASDAQ:WEN) were among the active stocks of the last trading sessions. American Express Company (NYSE:AXP) declined to -0.31% closing at the price of $106.66 whereas the shares of Wendy’s Company (The) (NASDAQ:WEN) soared 0.98% with the increase of 0.17 points closing at the price of $17.46. American Express Company has currently increase 16.44% in its stock over the period of 6-months while its rival Wendy’s Company (The) added 3.44% 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 American Express Company (NYSE:AXP) is 3.7% while the ROI of Wendy’s Company (The) (NASDAQ:WEN) is 5%. Another figure that is to be considered while analyzing the profitability of a share is its EBITDA margin, AXP’s EBITDA Margin is NOT AVAILABLE whereas WEN’s is 17.01.
Both the profitability ratios suggest a mixed sentiment for American Express Company (NYSE:AXP) and Wendy’s Company (The) (NASDAQ:WEN).
EPS & Surprise Factor
American Express Company (NYSE:AXP) reported $1.84/share EPS for the previous quarter where analysts were predicting an EPS to be $1.82/share Thus beating the analyst Estimates with a Surprise Factor of 1.1 Percent. While, Wendy’s Company (The) (NASDAQ:WEN) reported EPS of $0.14/share in the last quarter. The analysts projected EPS of $0.16/share depicting a Surprise of -12.5 Percent.
Taking a look at Earnings per Share, American Express Company tends to be beating the analyst estimates more than Wendy’s Company (The). so AXP is more profitable than WEN.
Technical Analysis of American Express Company & Wendy’s Company (The)
Moving average convergence divergence (MACD) shows that American Express Company (NYSE:AXP) is on a PRICE RELATIVITY trend While Wendy’s Company (The) (NASDAQ:WEN) is on PRICE RELATIVITY trend. The trend for the past 10-days shows that the American Express Company was in BEARISH territory and Wendy’s Company (The) was in BEARISH territory.
AXP’s current statistics gauge that the stock candle is BULLISH with LOW volatility. While WEN’s candle is BULLISH with LOW.
EPS Growth Rate: AXP’s 11.8% versus WEN’s 27.07%
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 American Express Company (NYSE:AXP) is predicted at 11.8% while Wendy’s Company (The) (NASDAQ:WEN) stands at 27.07%. These numbers suggest that WEN 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 AXP stands at 0 while WEN is at 1.7 whereas the debt ratio of the prior is 5.99 while the debt ratio of the later is 6.51.
The values of the both ratios suggest that WEN 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 2.3 for AXP and 2.1 for WEN which means AXP has Hold rating whereas WEN has Hold 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 AXP is $114.27 which is 6.66% of its current price while WEN has price target of 20.1 which is 13.13% 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.
AXP currently has price to earning P/E ratio of 15.64 whereas WEN has 55.61 while the forward P/E ratio for the prior stands at 13.27 and for the later it depicts the value of 25.38.
The price to Book P/B for AXP is 4.39, Price to Sale is at 2.43 and for WEN these ratios stand at 9.7 and 2.89.