The shares of Cigna Corporation (NYSE:CI) and Allison Transmission Holdings, Inc. (NYSE:ALSN) were among the active stocks of the last trading sessions. Cigna Corporation (NYSE:CI) soared to 0.54% closing at the price of $214.04 whereas the shares of Allison Transmission Holdings, Inc. (NYSE:ALSN) declined -4.13% with the decrease of -2.17 points closing at the price of $50.33. Cigna Corporation has currently increase 26.65% in its stock over the period of 6-months while its rival Allison Transmission Holdings, Inc. added 28.33% 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 Cigna Corporation (NYSE:CI) is 12.9% while the ROI of Allison Transmission Holdings, Inc. (NYSE:ALSN) is 14.3%. Another figure that is to be considered while analyzing the profitability of a share is its EBITDA margin, CI’s EBITDA Margin is 10.73 whereas ALSN’s is 9.23.
Both the profitability ratios suggest a mixed sentiment for Cigna Corporation (NYSE:CI) and Allison Transmission Holdings, Inc. (NYSE:ALSN).
EPS & Surprise Factor
Cigna Corporation (NYSE:CI) reported $3.89/share EPS for the previous quarter where analysts were predicting an EPS to be $3.33/share Thus beating the analyst Estimates with a Surprise Factor of 16.8 Percent. While, Allison Transmission Holdings, Inc. (NYSE:ALSN) reported EPS of $1.29/share in the last quarter. The analysts projected EPS of $1/share depicting a Surprise of 29 Percent.
Taking a look at Earnings per Share, Allison Transmission Holdings, Inc. tends to be beating the analyst estimates more than Cigna Corporation. so ALSN is more profitable than CI.
Technical Analysis of Cigna Corporation & Allison Transmission Holdings, Inc.
Moving average convergence divergence (MACD) shows that Cigna Corporation (NYSE:CI) is on a PRICE RELATIVITY trend While Allison Transmission Holdings, Inc. (NYSE:ALSN) is on PRICE RELATIVITY trend. The trend for the past 10-days shows that the Cigna Corporation was in BULLISH territory and Allison Transmission Holdings, Inc. was in BEARISH territory.
CI’s current statistics gauge that the stock candle is BULLISH with MEDIUM volatility. While ALSN’s candle is BEARISH with HIGH.
EPS Growth Rate: CI’s 14.48% versus ALSN’s 14.97%
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 Cigna Corporation (NYSE:CI) is predicted at 14.48% while Allison Transmission Holdings, Inc. (NYSE:ALSN) stands at 14.97%. These numbers suggest that ALSN 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 CI stands at 0 while ALSN is at 1.4 whereas the debt ratio of the prior is 0.36 while the debt ratio of the later is 4.19.
The values of the both ratios suggest that ALSN 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 CI and 2.4 for ALSN which means CI has Buy rating whereas ALSN 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 CI is $230.32 which is 7.07% of its current price while ALSN has price target of 50 which is -0.66% 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.
CI currently has price to earning P/E ratio of 19.08 whereas ALSN has 14.1 while the forward P/E ratio for the prior stands at 14.07 and for the later it depicts the value of 10.52.
The price to Book P/B for CI is 3.52, Price to Sale is at 1.17 and for ALSN these ratios stand at 11.21 and 2.63.