Which Stock will you hold for a while? Xerox Corporation (XRX) or Valvoline Inc. (VVV)

The shares of Xerox Corporation (NYSE:XRX) and Valvoline Inc. (NYSE:VVV) were among the active stocks of the last trading sessions. Xerox Corporation (NYSE:XRX) declined to -1.32% closing at the price of $26.21 whereas the shares of Valvoline Inc. (NYSE:VVV) declined -2.28% with the decrease of -0.47 points closing at the price of $20.1. Xerox Corporation has currently decrease -7.22% in its stock over the period of 6-months while its rival Valvoline Inc. subtracted -8.22% 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 Xerox Corporation (NYSE:XRX) is 5.7% while the ROI of Valvoline Inc. (NYSE:VVV) is 33.5%. Another figure that is to be considered while analyzing the profitability of a share is its EBITDA margin, XRX’s EBITDA Margin is 7.96 whereas VVV’s is 9.02.

Both the profitability ratios suggest that Valvoline Inc. (NYSE:VVV) is more suitable investment in terms of profitability and return.

EPS & Surprise Factor

Xerox Corporation (NYSE:XRX) reported $0.8/share EPS for the previous quarter where analysts were predicting an EPS to be $0.83/share Thus lagging the analyst Estimates with a Surprise Factor of -3.6 Percent. While, Valvoline Inc. (NYSE:VVV) reported EPS of $0.32/share in the last quarter. The analysts projected EPS of $0.35/share depicting a Surprise of -8.6 Percent.

Taking a look at Earnings per Share, Xerox Corporation tends to be beating the analyst estimates more than Valvoline Inc.. so XRX is more profitable than VVV.

Technical Analysis of Xerox Corporation & Valvoline Inc.

Moving average convergence divergence (MACD) shows that Xerox Corporation (NYSE:XRX) is on a PRICE RELATIVITY trend While Valvoline Inc. (NYSE:VVV) is on PRICE RELATIVITY trend. The trend for the past 10-days shows that the Xerox Corporation was in BEARISH territory and Valvoline Inc. was in BEARISH territory.

XRX’s current statistics gauge that the stock candle is BEARISH with MEDIUM volatility. While VVV’s candle is BEARISH with HIGH.

EPS Growth Rate: XRX’s 2% versus VVV’s 11.52%

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 Xerox Corporation (NYSE:XRX) is predicted at 2% while Valvoline Inc. (NYSE:VVV) stands at 11.52%. These numbers suggest that VVV 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 XRX stands at 1.8 while VVV is at 1.9 whereas the debt ratio of the prior is 0.97 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.

Analyst Recommendations

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 2.8 for XRX and 2.1 for VVV which means XRX has Hold rating whereas VVV 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 XRX is $38.5 which is 31.92% of its current price while VVV has price target of 23.91 which is 15.93% of its current price.

Valuation Ratios

Valuation is the process of determining the company’s worth for an investor, the valuation ratios give an insight to that worthiness.

XRX currently has price to earning P/E ratio of 13.52 whereas VVV has 13.65 while the forward P/E ratio for the prior stands at 7.42 and for the later it depicts the value of 13.5.

The price to Book P/B for XRX is 1.24, Price to Sale is at 0.68 and for VVV these ratios stand at 0 and 1.73.