The shares of CA Inc. (NASDAQ:CA) and Genworth Financial Inc (NYSE:GNW) were among the active stocks of the last trading sessions. CA Inc. (NASDAQ:CA) soared to 0.07% closing at the price of $44 whereas the shares of Genworth Financial Inc (NYSE:GNW) soared 2.17% with the increase of 0.09 points closing at the price of $4.23. CA Inc. has currently increase 27.57% in its stock over the period of 6-months while its rival Genworth Financial Inc added 50.53% 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 CA Inc. (NASDAQ:CA) is 10% while the ROI of Genworth Financial Inc (NYSE:GNW) is 4.2%. Another figure that is to be considered while analyzing the profitability of a share is its EBITDA margin, CA’s EBITDA Margin is 14.37 whereas GNW’s is 5.8.
Both the profitability ratios suggest that CA Inc. (NASDAQ:CA) is more suitable investment in terms of profitability and return.
EPS & Surprise Factor
CA Inc. (NASDAQ:CA) reported $0.76/share EPS for the previous quarter where analysts were predicting an EPS to be $0.68/share Thus beating the analyst Estimates with a Surprise Factor of 11.8 Percent. While, Genworth Financial Inc (NYSE:GNW) reported EPS of $0.4/share in the last quarter. The analysts projected EPS of $0.26/share depicting a Surprise of 53.8 Percent.
Taking a look at Earnings per Share, Genworth Financial Inc tends to be beating the analyst estimates more than CA Inc.. so GNW is more profitable than CA.
Technical Analysis of CA Inc. & Genworth Financial Inc
Moving average convergence divergence (MACD) shows that CA Inc. (NASDAQ:CA) is on a PRICE RELATIVITY trend While Genworth Financial Inc (NYSE:GNW) is on PRICE RELATIVITY trend. The trend for the past 10-days shows that the CA Inc. was in BEARISH territory and Genworth Financial Inc was in BULLISH territory.
CA’s current statistics gauge that the stock candle is BULLISH with LOW volatility. While GNW’s candle is BULLISH with MEDIUM.
EPS Growth Rate: CA’s 5.52% versus GNW’s 5%
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 CA Inc. (NASDAQ:CA) is predicted at 5.52% while Genworth Financial Inc (NYSE:GNW) stands at 5%. These numbers suggest that CA 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 CA stands at 2.2 while GNW is at 0 whereas the debt ratio of the prior is 0.35 while the debt ratio of the later is 0.34.
The values of the both ratios suggest that CA 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 3 for CA and 3 for GNW which means CA has Hold rating whereas GNW 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 CA is $42.51 which is -3.51% of its current price while GNW has price target of 4.5 which is 6% 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.
CA currently has price to earning P/E ratio of 17.48 whereas GNW has 6.36 while the forward P/E ratio for the prior stands at 15.33 and for the later it depicts the value of 3.79.
The price to Book P/B for CA is 2.31, Price to Sale is at 4.44 and for GNW these ratios stand at 0.16 and 0.26.