The shares of Enterprise Products Partners L.P. (NYSE:EPD) and Phillips 66 (NYSE:PSX) were among the active stocks of the last trading sessions. Enterprise Products Partners L.P. (NYSE:EPD) soared to 0.41% closing at the price of $29.33 whereas the shares of Phillips 66 (NYSE:PSX) declined -0.39% with the decrease of -0.46 points closing at the price of $117.68. Enterprise Products Partners L.P. has currently increase 15.56% in its stock over the period of 6-months while its rival Phillips 66 added 14.75% 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 Enterprise Products Partners L.P. (NYSE:EPD) is 8.3% while the ROI of Phillips 66 (NYSE:PSX) is 2.6%. Another figure that is to be considered while analyzing the profitability of a share is its EBITDA margin, EPD’s EBITDA Margin is 16.71 whereas PSX’s is 16.05.
Both the profitability ratios suggest that Enterprise Products Partners L.P. (NYSE:EPD) is more suitable investment in terms of profitability and return.
EPS & Surprise Factor
Enterprise Products Partners L.P. (NYSE:EPD) reported $0.31/share EPS for the previous quarter where analysts were predicting an EPS to be $0.4/share Thus lagging the analyst Estimates with a Surprise Factor of -22.5 Percent. While, Phillips 66 (NYSE:PSX) reported EPS of $2.8/share in the last quarter. The analysts projected EPS of $2.19/share depicting a Surprise of 27.9 Percent.
Taking a look at Earnings per Share, Phillips 66 tends to be beating the analyst estimates more than Enterprise Products Partners L.P.. so PSX is more profitable than EPD.
Technical Analysis of Enterprise Products Partners L.P. & Phillips 66
Moving average convergence divergence (MACD) shows that Enterprise Products Partners L.P. (NYSE:EPD) is on a PRICE RELATIVITY trend While Phillips 66 (NYSE:PSX) is on PRICE RELATIVITY trend. The trend for the past 10-days shows that the Enterprise Products Partners L.P. was in BULLISH territory and Phillips 66 was in BULLISH territory.
EPD’s current statistics gauge that the stock candle is BULLISH with LOW volatility. While PSX’s candle is BULLISH with HIGH.
EPS Growth Rate: EPD’s 5.3% versus PSX’s 45.4%
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 Enterprise Products Partners L.P. (NYSE:EPD) is predicted at 5.3% while Phillips 66 (NYSE:PSX) stands at 45.4%. These numbers suggest that PSX 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 EPD stands at 0.7 while PSX is at 1.2 whereas the debt ratio of the prior is 1.13 while the debt ratio of the later is 0.5.
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 1.4 for EPD and 2.5 for PSX which means EPD has Buy rating whereas PSX 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 EPD is $33.65 which is 12.84% of its current price while PSX has price target of 128.19 which is 8.2% 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.
EPD currently has price to earning P/E ratio of 21.66 whereas PSX has 18.42 while the forward P/E ratio for the prior stands at 16.39 and for the later it depicts the value of 11.89.
The price to Book P/B for EPD is 2.81, Price to Sale is at 1.92 and for PSX these ratios stand at 2.45 and 0.51.