The shares of Rowan Companies plc (NYSE:RDC) and WPX Energy, Inc. (NYSE:WPX) were among the active stocks of the last trading sessions. Rowan Companies plc (NYSE:RDC) declined to -9.18% closing at the price of $18.8 whereas the shares of WPX Energy, Inc. (NYSE:WPX) declined -6.18% with the decrease of -1.25 points closing at the price of $18.99. Rowan Companies plc has currently increase 29.57% in its stock over the period of 6-months while its rival WPX Energy, Inc. added 27.79% 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 Rowan Companies plc (NYSE:RDC) is 2.7% while the ROI of WPX Energy, Inc. (NYSE:WPX) is 1.3%. Another figure that is to be considered while analyzing the profitability of a share is its EBITDA margin, RDC’s EBITDA Margin is 14.87 whereas WPX’s is 22.35.
Both the profitability ratios suggest a mixed sentiment for Rowan Companies plc (NYSE:RDC) and WPX Energy, Inc. (NYSE:WPX).
EPS & Surprise Factor
Rowan Companies plc (NYSE:RDC) reported $-0.6/share EPS for the previous quarter where analysts were predicting an EPS to be $-0.94/share Thus beating the analyst Estimates with a Surprise Factor of 36.2 Percent. While, WPX Energy, Inc. (NYSE:WPX) reported EPS of $0.06/share in the last quarter. The analysts projected EPS of $0.03/share depicting a Surprise of 100 Percent.
Taking a look at Earnings per Share, WPX Energy, Inc. tends to be beating the analyst estimates more than Rowan Companies plc. so WPX is more profitable than RDC.
Technical Analysis of Rowan Companies plc & WPX Energy, Inc.
Moving average convergence divergence (MACD) shows that Rowan Companies plc (NYSE:RDC) is on a PRICE RELATIVITY trend While WPX Energy, Inc. (NYSE:WPX) is on PRICE RELATIVITY trend. The trend for the past 10-days shows that the Rowan Companies plc was in BULLISH territory and WPX Energy, Inc. was in BEARISH territory.
RDC’s current statistics gauge that the stock candle is BEARISH with MEDIUM volatility. While WPX’s candle is BEARISH with LOW.
EPS Growth Rate: RDC’s -4.4% versus WPX’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 Rowan Companies plc (NYSE:RDC) is predicted at -4.4% while WPX Energy, Inc. (NYSE:WPX) stands at 0%. These numbers suggest that WPX 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 RDC stands at 6.1 while WPX is at 0.6 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 2.3 for RDC and 1.7 for WPX which means RDC has Hold rating whereas WPX 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 RDC is $17.81 which is -5.56% of its current price while WPX has price target of 25.9 which is 26.68% 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.
RDC currently has price to earning P/E ratio of 0 whereas WPX has 0 while the forward P/E ratio for the prior stands at 0 and for the later it depicts the value of 21.36.
The price to Book P/B for RDC is 0.46, Price to Sale is at 2.26 and for WPX these ratios stand at 2.05 and 6.26.