The shares of Amgen Inc. (NASDAQ:AMGN) and Costco Wholesale Corporation (NASDAQ:COST) were among the active stocks of the last trading sessions. Amgen Inc. (NASDAQ:AMGN) soared to 0.21% closing at the price of $206 whereas the shares of Costco Wholesale Corporation (NASDAQ:COST) soared 0.11% with the increase of 0.24 points closing at the price of $224.17. Amgen Inc. has currently increase 19.48% in its stock over the period of 6-months while its rival Costco Wholesale Corporation added 21.4% 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 Amgen Inc. (NASDAQ:AMGN) is 14% while the ROI of Costco Wholesale Corporation (NASDAQ:COST) is 16%. Another figure that is to be considered while analyzing the profitability of a share is its EBITDA margin, AMGN’s EBITDA Margin is 10.96 whereas COST’s is 16.39.
Both the profitability ratios suggest that Costco Wholesale Corporation (NASDAQ:COST) is more suitable investment in terms of profitability and return.
EPS & Surprise Factor
Amgen Inc. (NASDAQ:AMGN) reported $3.83/share EPS for the previous quarter where analysts were predicting an EPS to be $3.54/share Thus beating the analyst Estimates with a Surprise Factor of 8.2 Percent. While, Costco Wholesale Corporation (NASDAQ:COST) reported EPS of $2.36/share in the last quarter. The analysts projected EPS of $2.36/share depicting a Surprise of 0 Percent.
Taking a look at Earnings per Share, Amgen Inc. tends to be beating the analyst estimates more than Costco Wholesale Corporation. so AMGN is more profitable than COST.
Technical Analysis of Amgen Inc. & Costco Wholesale Corporation
Moving average convergence divergence (MACD) shows that Amgen Inc. (NASDAQ:AMGN) is on a PRICE RELATIVITY trend While Costco Wholesale Corporation (NASDAQ:COST) is on PRICE RELATIVITY trend. The trend for the past 10-days shows that the Amgen Inc. was in BEARISH territory and Costco Wholesale Corporation was in BEARISH territory.
AMGN’s current statistics gauge that the stock candle is BULLISH with MEDIUM volatility. While COST’s candle is BEARISH with HIGH.
EPS Growth Rate: AMGN’s 5.38% versus COST’s 11.53%
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 Amgen Inc. (NASDAQ:AMGN) is predicted at 5.38% while Costco Wholesale Corporation (NASDAQ:COST) stands at 11.53%. These numbers suggest that COST 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 AMGN stands at 3.4 while COST is at 1 whereas the debt ratio of the prior is 2.31 while the debt ratio of the later is 0.
The values of the both ratios suggest that AMGN 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 2.3 for AMGN and 2.1 for COST which means AMGN has Hold rating whereas COST 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 AMGN is $205 which is -0.49% of its current price while COST has price target of 241.48 which is 7.17% 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.
AMGN currently has price to earning P/E ratio of 17.14 whereas COST has 34.37 while the forward P/E ratio for the prior stands at 14.14 and for the later it depicts the value of 26.77.
The price to Book P/B for AMGN is 9.06, Price to Sale is at 5.83 and for COST these ratios stand at 8.1 and 0.75.