The shares of Amazon.com, Inc. (NASDAQ:AMZN) and U.S. Bancorp (NYSE:USB) were among the active stocks of the last trading sessions. Amazon.com, Inc. (NASDAQ:AMZN) declined to -2.04% closing at the price of $1719.36 whereas the shares of U.S. Bancorp (NYSE:USB) declined -2.83% with the decrease of -1.51 points closing at the price of $51.82. Amazon.com, Inc. has currently increase 20.17% in its stock over the period of 6-months while its rival U.S. Bancorp added 1.71% 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 Amazon.com, Inc. (NASDAQ:AMZN) is 3.5% while the ROI of U.S. Bancorp (NYSE:USB) is 11.4%. Another figure that is to be considered while analyzing the profitability of a share is its EBITDA margin, AMZN’s EBITDA Margin is 44.99 whereas USB’s is NOT AVAILABLE.
Both the profitability ratios suggest that U.S. Bancorp (NYSE:USB) is more suitable investment in terms of profitability and return.
EPS & Surprise Factor
Amazon.com, Inc. (NASDAQ:AMZN) reported $5.07/share EPS for the previous quarter where analysts were predicting an EPS to be $2.54/share Thus beating the analyst Estimates with a Surprise Factor of 99.6 Percent. While, U.S. Bancorp (NYSE:USB) reported EPS of $1.02/share in the last quarter. The analysts projected EPS of $1/share depicting a Surprise of 2 Percent.
Taking a look at Earnings per Share, Amazon.com, Inc. tends to be beating the analyst estimates more than U.S. Bancorp. so AMZN is more profitable than USB.
Technical Analysis of Amazon.com, Inc. & U.S. Bancorp
Moving average convergence divergence (MACD) shows that Amazon.com, Inc. (NASDAQ:AMZN) is on a PRICE RELATIVITY trend While U.S. Bancorp (NYSE:USB) is on PRICE RELATIVITY trend. The trend for the past 10-days shows that the Amazon.com, Inc. was in BEARISH territory and U.S. Bancorp was in BULLISH territory.
AMZN’s current statistics gauge that the stock candle is BEARISH with HIGH volatility. While USB’s candle is BEARISH with HIGH.
EPS Growth Rate: AMZN’s 56.76% versus USB’s 6.8%
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 Amazon.com, Inc. (NASDAQ:AMZN) is predicted at 56.76% while U.S. Bancorp (NYSE:USB) stands at 6.8%. These numbers suggest that AMZN 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 AMZN stands at 1.1 while USB is at 0 whereas the debt ratio of the prior is 1.31 while the debt ratio of the later is 0.84.
The values of the both ratios suggest that AMZN 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 1.7 for AMZN and 2.6 for USB which means AMZN has Buy rating whereas USB 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 AMZN is $2136.67 which is 19.53% of its current price while USB has price target of 57.84 which is 10.41% 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.
AMZN currently has price to earning P/E ratio of 156.15 whereas USB has 15.76 while the forward P/E ratio for the prior stands at 67.87 and for the later it depicts the value of 11.89.
The price to Book P/B for AMZN is 23.88, Price to Sale is at 4.07 and for USB these ratios stand at 1.92 and 5.58.