Comparing Profitability of these two stocks: Splunk Inc. (SPLK), Altice USA, Inc. (ATUS)

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The shares of Splunk Inc. (NASDAQ:SPLK) and Altice USA, Inc. (NYSE:ATUS) were among the active stocks of the last trading sessions. Splunk Inc. (NASDAQ:SPLK) declined to -5.5% closing at the price of $98.45 whereas the shares of Altice USA, Inc. (NYSE:ATUS) declined -3.3% with the decrease of -0.61 points closing at the price of $17.9. Splunk Inc. has currently decrease -7.46% in its stock over the period of 6-months while its rival Altice USA, Inc. added 3.95% 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 Splunk Inc. (NASDAQ:SPLK) is -22.6% while the ROI of Altice USA, Inc. (NYSE:ATUS) is 2.8%. Another figure that is to be considered while analyzing the profitability of a share is its EBITDA margin, SPLK’s EBITDA Margin is -63.32 whereas ATUS’s is 9.1.

Both the profitability ratios suggest that Altice USA, Inc. (NYSE:ATUS) is more suitable investment in terms of profitability and return.

EPS & Surprise Factor

Splunk Inc. (NASDAQ:SPLK) reported $0.08/share EPS for the previous quarter where analysts were predicting an EPS to be $0.05/share Thus beating the analyst Estimates with a Surprise Factor of 60 Percent. While, Altice USA, Inc. (NYSE:ATUS) reported EPS of $-0.13/share in the last quarter. The analysts projected EPS of $-0.06/share depicting a Surprise of -116.7 Percent.

Taking a look at Earnings per Share, Splunk Inc. tends to be beating the analyst estimates more than Altice USA, Inc.. so SPLK is more profitable than ATUS.

Technical Analysis of Splunk Inc. & Altice USA, Inc.

Moving average convergence divergence (MACD) shows that Splunk Inc. (NASDAQ:SPLK) is on a PRICE RELATIVITY trend While Altice USA, Inc. (NYSE:ATUS) is on PRICE RELATIVITY trend. The trend for the past 10-days shows that the Splunk Inc. was in BEARISH territory and Altice USA, Inc. was in BULLISH territory.

SPLK’s current statistics gauge that the stock candle is BEARISH with HIGH volatility. While ATUS’s candle is BEARISH with LOW.

EPS Growth Rate: SPLK’s 35.67% versus ATUS’s 0%

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 Splunk Inc. (NASDAQ:SPLK) is predicted at 35.67% while Altice USA, Inc. (NYSE:ATUS) stands at 0%. These numbers suggest that SPLK 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 SPLK stands at 1.7 while ATUS is at 0.3 whereas the debt ratio of the prior is 0 while the debt ratio of the later is 5.71.

The values of the both ratios suggest that one is more liquid and other investment is more risk free.

Analyst Recommendations

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 1.9 for SPLK and 2 for ATUS which means SPLK has Buy rating whereas ATUS 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 SPLK is $132.14 which is 25.5% of its current price while ATUS has price target of 25.48 which is 29.75% of its current price.

Valuation Ratios

Valuation is the process of determining the company’s worth for an investor, the valuation ratios give an insight to that worthiness.

SPLK currently has price to earning P/E ratio of 0 whereas ATUS has 0 while the forward P/E ratio for the prior stands at 63.03 and for the later it depicts the value of 51.14.

The price to Book P/B for SPLK is 12.45, Price to Sale is at 10.08 and for ATUS these ratios stand at 3.27 and 1.46.