The shares of Kellogg Company (NYSE:K) and Radian Group Inc. (NYSE:RDN) were among the active stocks of the last trading sessions. Kellogg Company (NYSE:K) declined to -1.81% closing at the price of $68.99 whereas the shares of Radian Group Inc. (NYSE:RDN) soared 1.16% with the increase of 0.23 points closing at the price of $20.02. Kellogg Company has currently increase 8.9% in its stock over the period of 6-months while its rival Radian Group Inc. added 22.9% 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 Kellogg Company (NYSE:K) is 14.2% while the ROI of Radian Group Inc. (NYSE:RDN) is 7.1%. Another figure that is to be considered while analyzing the profitability of a share is its EBITDA margin, K’s EBITDA Margin is 11.1 whereas RDN’s is 5.38.
Both the profitability ratios suggest that Kellogg Company (NYSE:K) is more suitable investment in terms of profitability and return.
EPS & Surprise Factor
Kellogg Company (NYSE:K) reported $1.14/share EPS for the previous quarter where analysts were predicting an EPS to be $1.05/share Thus beating the analyst Estimates with a Surprise Factor of 8.6 Percent. While, Radian Group Inc. (NYSE:RDN) reported EPS of $0.69/share in the last quarter. The analysts projected EPS of $0.6/share depicting a Surprise of 15 Percent.
Taking a look at Earnings per Share, Radian Group Inc. tends to be beating the analyst estimates more than Kellogg Company. so RDN is more profitable than K.
Technical Analysis of Kellogg Company & Radian Group Inc.
Moving average convergence divergence (MACD) shows that Kellogg Company (NYSE:K) is on a PRICE RELATIVITY trend While Radian Group Inc. (NYSE:RDN) is on PRICE RELATIVITY trend. The trend for the past 10-days shows that the Kellogg Company was in BEARISH territory and Radian Group Inc. was in BEARISH territory.
K’s current statistics gauge that the stock candle is BEARISH with HIGH volatility. While RDN’s candle is BULLISH with MEDIUM.
EPS Growth Rate: K’s 6.85% versus RDN’s 14.95%
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 Kellogg Company (NYSE:K) is predicted at 6.85% while Radian Group Inc. (NYSE:RDN) stands at 14.95%. These numbers suggest that RDN 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 K stands at 0.8 while RDN is at 0 whereas the debt ratio of the prior is 3.2 while the debt ratio of the later is 0.36.
The values of the both ratios suggest that K 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 2.7 for K and 2 for RDN which means K has Hold rating whereas RDN 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 K is $73.41 which is 6.02% of its current price while RDN has price target of 24.04 which is 16.72% 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.
K currently has price to earning P/E ratio of 13.57 whereas RDN has 8.81 while the forward P/E ratio for the prior stands at 14.67 and for the later it depicts the value of 7.34.
The price to Book P/B for K is 8.43, Price to Sale is at 1.8 and for RDN these ratios stand at 1.34 and 3.52.