The shares of TripAdvisor, Inc. (NASDAQ:TRIP) and British American Tobacco p.l.c. (NYSE:BTI) were among the active stocks of the last trading sessions. TripAdvisor, Inc. (NASDAQ:TRIP) soared to 1.02% closing at the price of $44.65 whereas the shares of British American Tobacco p.l.c. (NYSE:BTI) declined -1.29% with the decrease of -0.58 points closing at the price of $44.34. TripAdvisor, Inc. has currently increase 10.19% in its stock over the period of 6-months while its rival British American Tobacco p.l.c. subtracted -24.63% 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 TripAdvisor, Inc. (NASDAQ:TRIP) is 4.3% while the ROI of British American Tobacco p.l.c. (NYSE:BTI) is 4.5%. Another figure that is to be considered while analyzing the profitability of a share is its EBITDA margin, TRIP’s EBITDA Margin is 37.27 whereas BTI’s is 12.56.
Both the profitability ratios suggest a mixed sentiment for TripAdvisor, Inc. (NASDAQ:TRIP) and British American Tobacco p.l.c. (NYSE:BTI).
EPS & Surprise Factor
Technical Analysis of TripAdvisor, Inc. & British American Tobacco p.l.c.
Moving average convergence divergence (MACD) shows that TripAdvisor, Inc. (NASDAQ:TRIP) is on a PRICE RELATIVITY trend While British American Tobacco p.l.c. (NYSE:BTI) is on PRICE RELATIVITY trend. The trend for the past 10-days shows that the TripAdvisor, Inc. was in BEARISH territory and British American Tobacco p.l.c. was in BEARISH territory.
TRIP’s current statistics gauge that the stock candle is BULLISH with HIGH volatility. While BTI’s candle is BEARISH with HIGH.
EPS Growth Rate: TRIP’s 15.44% versus BTI’s 10.4%
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 TripAdvisor, Inc. (NASDAQ:TRIP) is predicted at 15.44% while British American Tobacco p.l.c. (NYSE:BTI) stands at 10.4%. These numbers suggest that TRIP 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 TRIP stands at 1.6 while BTI is at 0.8 whereas the debt ratio of the prior is 0 while the debt ratio of the later is 0.78.
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 3.2 for TRIP and 1 for BTI which means TRIP has Sell rating whereas BTI has Strong 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 TRIP is $48.45 which is 7.84% of its current price while BTI has price target of 65.5 which is 32.31% 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.
TRIP currently has price to earning P/E ratio of 122.66 whereas BTI has 2.69 while the forward P/E ratio for the prior stands at 27.98 and for the later it depicts the value of 12.61.
The price to Book P/B for TRIP is 4.57, Price to Sale is at 3.97 and for BTI these ratios stand at 1.25 and 3.29.