The shares of Energy Transfer Equity, L.P. (NYSE:ETE) and Petroleo Brasileiro S.A.- Petrobras (NYSE:PBR-A) were among the active stocks of the last trading sessions. Energy Transfer Equity, L.P. (NYSE:ETE) declined to -2.01% closing at the price of $17.07 whereas the shares of Petroleo Brasileiro S.A.- Petrobras (NYSE:PBR-A) declined -4.44% with the decrease of -0.64 points closing at the price of $13.78. Energy Transfer Equity, L.P. has currently increase 15.18% in its stock over the period of 6-months while its rival Petroleo Brasileiro S.A.- Petrobras added 8.49% 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 Energy Transfer Equity, L.P. (NYSE:ETE) is 6.2% while the ROI of Petroleo Brasileiro S.A.- Petrobras (NYSE:PBR-A) is 0%. Another figure that is to be considered while analyzing the profitability of a share is its EBITDA margin, ETE’s EBITDA Margin is 13.64 whereas PBR-A’s is 6.54.
Both the profitability ratios suggest that Energy Transfer Equity, L.P. (NYSE:ETE) is more suitable investment in terms of profitability and return.
EPS & Surprise Factor
Energy Transfer Equity, L.P. (NYSE:ETE) reported $0.31/share EPS for the previous quarter where analysts were predicting an EPS to be $0.46/share Thus lagging the analyst Estimates with a Surprise Factor of -32.6 Percent. While, Petroleo Brasileiro S.A.- Petrobras (NYSE:PBR-A) reported EPS of $0.43/share in the last quarter. The analysts projected EPS of $0.04/share depicting a Surprise of 975 Percent.
Taking a look at Earnings per Share, Petroleo Brasileiro S.A.- Petrobras tends to be beating the analyst estimates more than Energy Transfer Equity, L.P.. so PBR-A is more profitable than ETE.
EPS Growth Rate: ETE’s 13% versus PBR-A’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 Energy Transfer Equity, L.P. (NYSE:ETE) is predicted at 13% while Petroleo Brasileiro S.A.- Petrobras (NYSE:PBR-A) stands at 0%. These numbers suggest that ETE 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 ETE stands at 1 while PBR-A is at 0 whereas the debt ratio of the prior is 0 while the debt ratio of the later is 0.
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 1.6 for ETE and 2.8 for PBR-A which means ETE has Buy rating whereas PBR-A 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 ETE is $21.53 which is 20.72% of its current price while PBR-A has price target of 12.24 which is -12.58% 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.
ETE currently has price to earning P/E ratio of 0 whereas PBR-A has 28.83 while the forward P/E ratio for the prior stands at 8.77 and for the later it depicts the value of 6.82.
The price to Book P/B for ETE is 0, Price to Sale is at 0.41 and for PBR-A these ratios stand at 1.21 and 1.11.