The shares of Equity Residential (NYSE:EQR) and Prospect Capital Corporation (NASDAQ:PSEC) were among the active stocks of the last trading sessions. Equity Residential (NYSE:EQR) soared to 0.38% closing at the price of $65.55 whereas the shares of Prospect Capital Corporation (NASDAQ:PSEC) soared 1.41% with the increase of 0.1 points closing at the price of $7.17. Equity Residential has currently increase 4.83% in its stock over the period of 6-months while its rival Prospect Capital Corporation added 10.65% 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 Equity Residential (NYSE:EQR) is 4.4% while the ROI of Prospect Capital Corporation (NASDAQ:PSEC) is 4.9%. Another figure that is to be considered while analyzing the profitability of a share is its EBITDA margin, EQR’s EBITDA Margin is 20.44 whereas PSEC’s is NOT AVAILABLE.
Both the profitability ratios suggest that Prospect Capital Corporation (NASDAQ:PSEC) is more suitable investment in terms of profitability and return.
EPS & Surprise Factor
Equity Residential (NYSE:EQR) reported $0.31/share EPS for the previous quarter where analysts were predicting an EPS to be $0.31/share Thus meeting the analyst Estimates with a Surprise Factor of 0 Percent. While, Prospect Capital Corporation (NASDAQ:PSEC) reported EPS of $0.22/share in the last quarter. The analysts projected EPS of $0.2/share depicting a Surprise of 10 Percent.
Taking a look at Earnings per Share, Prospect Capital Corporation tends to be beating the analyst estimates more than Equity Residential. so PSEC is more profitable than EQR.
Technical Analysis of Equity Residential & Prospect Capital Corporation
Moving average convergence divergence (MACD) shows that Equity Residential (NYSE:EQR) is on a PRICE RELATIVITY trend While Prospect Capital Corporation (NASDAQ:PSEC) is on PRICE RELATIVITY trend. The trend for the past 10-days shows that the Equity Residential was in BEARISH territory and Prospect Capital Corporation was in BEARISH territory.
EQR’s current statistics gauge that the stock candle is BULLISH with MEDIUM volatility. While PSEC’s candle is BULLISH with HIGH.
EPS Growth Rate: EQR’s 2.7% versus PSEC’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 Equity Residential (NYSE:EQR) is predicted at 2.7% while Prospect Capital Corporation (NASDAQ:PSEC) stands at 5%. These numbers suggest that PSEC 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 EQR stands at 0 while PSEC is at 0 whereas the debt ratio of the prior is 0.86 while the debt ratio of the later is 0.68.
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 2.9 for EQR and 3.5 for PSEC which means EQR has Hold rating whereas PSEC has Sell 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 EQR is $67.41 which is 2.76% of its current price while PSEC has price target of 6 which is -19.5% 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.
EQR currently has price to earning P/E ratio of 41.23 whereas PSEC has 8.65 while the forward P/E ratio for the prior stands at 48.7 and for the later it depicts the value of 8.37.
The price to Book P/B for EQR is 2.37, Price to Sale is at 9.92 and for PSEC these ratios stand at 0.77 and 4.04.