The shares of The Blackstone Group L.P. (NYSE:BX) and Caterpillar, Inc. (NYSE:CAT) were among the active stocks of the last trading sessions. The Blackstone Group L.P. (NYSE:BX) declined to -6.4% closing at the price of $34.78 whereas the shares of Caterpillar, Inc. (NYSE:CAT) declined -3.84% with the decrease of -5.74 points closing at the price of $143.72. The Blackstone Group L.P. has currently increase 11.73% in its stock over the period of 6-months while its rival Caterpillar, Inc. subtracted -4.28% 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 The Blackstone Group L.P. (NYSE:BX) is 15.6% while the ROI of Caterpillar, Inc. (NYSE:CAT) is 7.3%. Another figure that is to be considered while analyzing the profitability of a share is its EBITDA margin, BX’s EBITDA Margin is NOT AVAILABLE whereas CAT’s is 11.49.
Both the profitability ratios suggest that The Blackstone Group L.P. (NYSE:BX) is more suitable investment in terms of profitability and return.
EPS & Surprise Factor
The Blackstone Group L.P. (NYSE:BX) reported $0.9/share EPS for the previous quarter where analysts were predicting an EPS to be $0.75/share Thus beating the analyst Estimates with a Surprise Factor of 20 Percent. While, Caterpillar, Inc. (NYSE:CAT) reported EPS of $2.97/share in the last quarter. The analysts projected EPS of $2.73/share depicting a Surprise of 8.8 Percent.
Taking a look at Earnings per Share, The Blackstone Group L.P. tends to be beating the analyst estimates more than Caterpillar, Inc.. so BX is more profitable than CAT.
Technical Analysis of The Blackstone Group L.P. & Caterpillar, Inc.
Moving average convergence divergence (MACD) shows that The Blackstone Group L.P. (NYSE:BX) is on a PRICE RELATIVITY trend While Caterpillar, Inc. (NYSE:CAT) is on PRICE RELATIVITY trend. The trend for the past 10-days shows that the The Blackstone Group L.P. was in BEARISH territory and Caterpillar, Inc. was in BEARISH territory.
BX’s current statistics gauge that the stock candle is BEARISH with HIGH volatility. While CAT’s candle is BEARISH with HIGH.
EPS Growth Rate: BX’s 6.8% versus CAT’s 25.76%
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 The Blackstone Group L.P. (NYSE:BX) is predicted at 6.8% while Caterpillar, Inc. (NYSE:CAT) stands at 25.76%. These numbers suggest that CAT 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 BX stands at 0 while CAT is at 1.4 whereas the debt ratio of the prior is 1.49 while the debt ratio of the later is 2.43.
The values of the both ratios suggest that CAT 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 1.6 for BX and 2.3 for CAT which means BX has Buy rating whereas CAT 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 BX is $44.05 which is 21.04% of its current price while CAT has price target of 167.86 which is 14.38% 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.
BX currently has price to earning P/E ratio of 11.17 whereas CAT has 15.75 while the forward P/E ratio for the prior stands at 10.71 and for the later it depicts the value of 11.15.
The price to Book P/B for BX is 3.36, Price to Sale is at 5.26 and for CAT these ratios stand at 5.76 and 1.71.