The shares of Adobe Systems Incorporated (NASDAQ:ADBE) and Etsy, Inc. (NASDAQ:ETSY) were among the active stocks of the last trading sessions. Adobe Systems Incorporated (NASDAQ:ADBE) declined to -0.21% closing at the price of $254.16 whereas the shares of Etsy, Inc. (NASDAQ:ETSY) declined -1.72% with the decrease of -0.74 points closing at the price of $42.25. Adobe Systems Incorporated has currently increase 13.65% in its stock over the period of 6-months while its rival Etsy, Inc. added 39.9% 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 Adobe Systems Incorporated (NASDAQ:ADBE) is 16.7% while the ROI of Etsy, Inc. (NASDAQ:ETSY) is 7.5%. Another figure that is to be considered while analyzing the profitability of a share is its EBITDA margin, ADBE’s EBITDA Margin is 40.59 whereas ETSY’s is 61.06.
Both the profitability ratios suggest a mixed sentiment for Adobe Systems Incorporated (NASDAQ:ADBE) and Etsy, Inc. (NASDAQ:ETSY).
EPS & Surprise Factor
Adobe Systems Incorporated (NASDAQ:ADBE) reported $1.73/share EPS for the previous quarter where analysts were predicting an EPS to be $1.69/share Thus beating the analyst Estimates with a Surprise Factor of 2.4 Percent. While, Etsy, Inc. (NASDAQ:ETSY) reported EPS of $0.03/share in the last quarter. The analysts projected EPS of $0.04/share depicting a Surprise of -25 Percent.
Taking a look at Earnings per Share, Adobe Systems Incorporated tends to be beating the analyst estimates more than Etsy, Inc.. so ADBE is more profitable than ETSY.
Technical Analysis of Adobe Systems Incorporated & Etsy, Inc.
Moving average convergence divergence (MACD) shows that Adobe Systems Incorporated (NASDAQ:ADBE) is on a PRICE RELATIVITY trend While Etsy, Inc. (NASDAQ:ETSY) is on PRICE RELATIVITY trend. The trend for the past 10-days shows that the Adobe Systems Incorporated was in BEARISH territory and Etsy, Inc. was in BEARISH territory.
ADBE’s current statistics gauge that the stock candle is BEARISH with HIGH volatility. While ETSY’s candle is BEARISH with HIGH.
EPS Growth Rate: ADBE’s 23.35% versus ETSY’s 15%
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 Adobe Systems Incorporated (NASDAQ:ADBE) is predicted at 23.35% while Etsy, Inc. (NASDAQ:ETSY) stands at 15%. These numbers suggest that ADBE 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 ADBE stands at 1.7 while ETSY is at 5.9 whereas the debt ratio of the prior is 0.21 while the debt ratio of the later is 0.75.
The values of the both ratios suggest that ETSY 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 for ADBE and 2.5 for ETSY which means ADBE has Buy rating whereas ETSY 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 ADBE is $290.28 which is 12.44% of its current price while ETSY has price target of 51 which is 17.16% 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.
ADBE currently has price to earning P/E ratio of 47.98 whereas ETSY has 94.1 while the forward P/E ratio for the prior stands at 32.43 and for the later it depicts the value of 61.23.
The price to Book P/B for ADBE is 14.06, Price to Sale is at 14.5 and for ETSY these ratios stand at 13.63 and 10.57.