The shares of Texas Instruments Incorporated (NASDAQ:TXN) and Rite Aid Corporation (NYSE:RAD) were among the active stocks of the last trading sessions. Texas Instruments Incorporated (NASDAQ:TXN) declined to -3.53% closing at the price of $99.24 whereas the shares of Rite Aid Corporation (NYSE:RAD) declined -2.63% with the decrease of -0.03 points closing at the price of $1.11. Texas Instruments Incorporated has currently decrease -4.8% in its stock over the period of 6-months while its rival Rite Aid Corporation subtracted -31.9% 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 Texas Instruments Incorporated (NASDAQ:TXN) is 26% while the ROI of Rite Aid Corporation (NYSE:RAD) is 3%. Another figure that is to be considered while analyzing the profitability of a share is its EBITDA margin, TXN’s EBITDA Margin is 13.34 whereas RAD’s is 9.9.
Both the profitability ratios suggest that Texas Instruments Incorporated (NASDAQ:TXN) is more suitable investment in terms of profitability and return.
EPS & Surprise Factor
Texas Instruments Incorporated (NASDAQ:TXN) reported $1.4/share EPS for the previous quarter where analysts were predicting an EPS to be $1.32/share Thus beating the analyst Estimates with a Surprise Factor of 6.1 Percent. While, Rite Aid Corporation (NYSE:RAD) reported EPS of $-0.01/share in the last quarter. The analysts projected EPS of $-0.01/share depicting a Surprise of 0 Percent.
Taking a look at Earnings per Share, Texas Instruments Incorporated tends to be beating the analyst estimates more than Rite Aid Corporation. so TXN is more profitable than RAD.
Technical Analysis of Texas Instruments Incorporated & Rite Aid Corporation
Moving average convergence divergence (MACD) shows that Texas Instruments Incorporated (NASDAQ:TXN) is on a PRICE RELATIVITY trend While Rite Aid Corporation (NYSE:RAD) is on PRICE RELATIVITY trend. The trend for the past 10-days shows that the Texas Instruments Incorporated was in BEARISH territory and Rite Aid Corporation was in BEARISH territory.
TXN’s current statistics gauge that the stock candle is BULLISH with HIGH volatility. While RAD’s candle is BEARISH with MEDIUM.
EPS Growth Rate: TXN’s 13.57% versus RAD’s -3.69%
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 Texas Instruments Incorporated (NASDAQ:TXN) is predicted at 13.57% while Rite Aid Corporation (NYSE:RAD) stands at -3.69%. These numbers suggest that TXN 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 TXN stands at 6.5 while RAD is at 1.6 whereas the debt ratio of the prior is 0.48 while the debt ratio of the later is 2.42.
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 TXN and 3.3 for RAD which means TXN has Hold rating whereas RAD has Sell 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 TXN is $124.26 which is 20.14% of its current price while RAD has price target of 1.31 which is 15.27% 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.
TXN currently has price to earning P/E ratio of 22.74 whereas RAD has 0 while the forward P/E ratio for the prior stands at 16.1 and for the later it depicts the value of 19.47.
The price to Book P/B for TXN is 9.12, Price to Sale is at 6.31 and for RAD these ratios stand at 0.8 and 0.05.