The shares of Realogy Holdings Corp. (NYSE:RLGY) and CarMax Inc (NYSE:KMX) were among the active stocks of the last trading sessions. Realogy Holdings Corp. (NYSE:RLGY) declined to -2.14% closing at the price of $19.66 whereas the shares of CarMax Inc (NYSE:KMX) declined -0.35% with the decrease of -0.25 points closing at the price of $70.78. Realogy Holdings Corp. has currently decrease -28.54% in its stock over the period of 6-months while its rival CarMax Inc added 16.99% 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 Realogy Holdings Corp. (NYSE:RLGY) is 6.9% while the ROI of CarMax Inc (NYSE:KMX) is 4.1%. Another figure that is to be considered while analyzing the profitability of a share is its EBITDA margin, RLGY’s EBITDA Margin is 8.8 whereas KMX’s is 19.96.
Both the profitability ratios suggest a mixed sentiment for Realogy Holdings Corp. (NYSE:RLGY) and CarMax Inc (NYSE:KMX).
EPS & Surprise Factor
Realogy Holdings Corp. (NYSE:RLGY) reported $1/share EPS for the previous quarter where analysts were predicting an EPS to be $0.98/share Thus beating the analyst Estimates with a Surprise Factor of 2 Percent. While, CarMax Inc (NYSE:KMX) reported EPS of $1.24/share in the last quarter. The analysts projected EPS of $1.22/share depicting a Surprise of 1.6 Percent.
Taking a look at Earnings per Share, Realogy Holdings Corp. tends to be beating the analyst estimates more than CarMax Inc. so RLGY is more profitable than KMX.
Technical Analysis of Realogy Holdings Corp. & CarMax Inc
Moving average convergence divergence (MACD) shows that Realogy Holdings Corp. (NYSE:RLGY) is on a PRICE RELATIVITY trend While CarMax Inc (NYSE:KMX) is on PRICE RELATIVITY trend. The trend for the past 10-days shows that the Realogy Holdings Corp. was in BEARISH territory and CarMax Inc was in BEARISH territory.
RLGY’s current statistics gauge that the stock candle is BEARISH with MEDIUM volatility. While KMX’s candle is BULLISH with HIGH.
EPS Growth Rate: RLGY’s 20% versus KMX’s 13.73%
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 Realogy Holdings Corp. (NYSE:RLGY) is predicted at 20% while CarMax Inc (NYSE:KMX) stands at 13.73%. These numbers suggest that RLGY 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 RLGY stands at 0.6 while KMX is at 2.3 whereas the debt ratio of the prior is 1.58 while the debt ratio of the later is 3.92.
The values of the both ratios suggest that KMX 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 2.8 for RLGY and 2 for KMX which means RLGY has Hold rating whereas KMX has Buy 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 RLGY is $28.14 which is 30.14% of its current price while KMX has price target of 86.07 which is 17.76% 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.
RLGY currently has price to earning P/E ratio of 10.36 whereas KMX has 17.17 while the forward P/E ratio for the prior stands at 8.88 and for the later it depicts the value of 14.07.
The price to Book P/B for RLGY is 1.02, Price to Sale is at 0.4 and for KMX these ratios stand at 3.73 and 0.71.