The shares of Pure Storage, Inc. (NYSE:PSTG) and CommScope Holding Company, Inc. (NASDAQ:COMM) were among the active stocks of the last trading sessions. Pure Storage, Inc. (NYSE:PSTG) declined to -0.55% closing at the price of $23.48 whereas the shares of CommScope Holding Company, Inc. (NASDAQ:COMM) declined -2.48% with the decrease of -0.69 points closing at the price of $27.18. Pure Storage, Inc. has currently increase 25.56% in its stock over the period of 6-months while its rival CommScope Holding Company, Inc. subtracted -31.43% 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 Pure Storage, Inc. (NYSE:PSTG) is -32.9% while the ROI of CommScope Holding Company, Inc. (NASDAQ:COMM) is 8%. Another figure that is to be considered while analyzing the profitability of a share is its EBITDA margin, PSTG’s EBITDA Margin is -41.1 whereas COMM’s is 10.29.
Both the profitability ratios suggest that CommScope Holding Company, Inc. (NASDAQ:COMM) is more suitable investment in terms of profitability and return.
EPS & Surprise Factor
Pure Storage, Inc. (NYSE:PSTG) reported $0.01/share EPS for the previous quarter where analysts were predicting an EPS to be $-0.06/share Thus beating the analyst Estimates with a Surprise Factor of 116.7 Percent. While, CommScope Holding Company, Inc. (NASDAQ:COMM) reported EPS of $0.68/share in the last quarter. The analysts projected EPS of $0.65/share depicting a Surprise of 4.6 Percent.
Taking a look at Earnings per Share, Pure Storage, Inc. tends to be beating the analyst estimates more than CommScope Holding Company, Inc.. so PSTG is more profitable than COMM.
Technical Analysis of Pure Storage, Inc. & CommScope Holding Company, Inc.
Moving average convergence divergence (MACD) shows that Pure Storage, Inc. (NYSE:PSTG) is on a PRICE RELATIVITY trend While CommScope Holding Company, Inc. (NASDAQ:COMM) is on PRICE RELATIVITY trend. The trend for the past 10-days shows that the Pure Storage, Inc. was in BEARISH territory and CommScope Holding Company, Inc. was in BEARISH territory.
PSTG’s current statistics gauge that the stock candle is BEARISH with HIGH volatility. While COMM’s candle is BEARISH with HIGH.
EPS Growth Rate: PSTG’s 0% versus COMM’s 11.56%
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 Pure Storage, Inc. (NYSE:PSTG) is predicted at 0% while CommScope Holding Company, Inc. (NASDAQ:COMM) stands at 11.56%. These numbers suggest that COMM 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 PSTG stands at 4 while COMM is at 2.8 whereas the debt ratio of the prior is 0.68 while the debt ratio of the later is 0.
The values of the both ratios suggest that PSTG 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 2.1 for PSTG and 2.1 for COMM which means PSTG has Hold rating whereas COMM 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 PSTG is $27.16 which is 13.55% of its current price while COMM has price target of 34.96 which is 22.25% 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.
PSTG currently has price to earning P/E ratio of 0 whereas COMM has 23.41 while the forward P/E ratio for the prior stands at 50.49 and for the later it depicts the value of 10.21.
The price to Book P/B for PSTG is 8.36, Price to Sale is at 4.82 and for COMM these ratios stand at 3.07 and 1.2.