The shares of Berkshire Hathaway Inc. (NYSE:BRK-B) and Fitbit, Inc. (NYSE:FIT) were among the active stocks of the last trading sessions. Berkshire Hathaway Inc. (NYSE:BRK-B) soared to 0.77% closing at the price of $223.76 whereas the shares of Fitbit, Inc. (NYSE:FIT) declined -2.56% with the decrease of -0.13 points closing at the price of $4.94. Berkshire Hathaway Inc. has currently increase 14.62% in its stock over the period of 6-months while its rival Fitbit, Inc. subtracted -4.45% 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 Berkshire Hathaway Inc. (NYSE:BRK-B) is 0% while the ROI of Fitbit, Inc. (NYSE:FIT) is -28.9%. Another figure that is to be considered while analyzing the profitability of a share is its EBITDA margin, BRK-B’s EBITDA Margin is -0.16 whereas FIT’s is -4.65.
Both the profitability ratios suggest that Berkshire Hathaway Inc. (NYSE:BRK-B) is more suitable investment in terms of profitability and return.
EPS & Surprise Factor
Berkshire Hathaway Inc. (NYSE:BRK-B) reported $2.79/share EPS for the previous quarter where analysts were predicting an EPS to be $2.24/share Thus beating the analyst Estimates with a Surprise Factor of 24.6 Percent. While, Fitbit, Inc. (NYSE:FIT) reported EPS of $-0.22/share in the last quarter. The analysts projected EPS of $-0.24/share depicting a Surprise of 8.3 Percent.
Taking a look at Earnings per Share, Berkshire Hathaway Inc. tends to be beating the analyst estimates more than Fitbit, Inc.. so BRK-B is more profitable than FIT.
EPS Growth Rate: BRK-B’s 8.8% versus FIT’s 13%
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 Berkshire Hathaway Inc. (NYSE:BRK-B) is predicted at 8.8% while Fitbit, Inc. (NYSE:FIT) stands at 13%. These numbers suggest that FIT 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 BRK-B stands at 0 while FIT is at 1.9 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 2.2 for BRK-B and 3 for FIT which means BRK-B has Hold rating whereas FIT 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 BRK-B is $243.25 which is 8.01% of its current price while FIT has price target of 6.39 which is 22.69% 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.
BRK-B currently has price to earning P/E ratio of 11.62 whereas FIT has 0 while the forward P/E ratio for the prior stands at 22.07 and for the later it depicts the value of 0.
The price to Book P/B for BRK-B is 0, Price to Sale is at 2.32 and for FIT these ratios stand at 1.76 and 0.8.