The shares of Groupon, Inc. (NASDAQ:GRPN) and Dollar Tree, Inc. (NASDAQ:DLTR) were among the active stocks of the last trading sessions. Groupon, Inc. (NASDAQ:GRPN) soared to 6.34% closing at the price of $3.52 whereas the shares of Dollar Tree, Inc. (NASDAQ:DLTR) declined -5.6% with the decrease of -4.72 points closing at the price of $79.51. Groupon, Inc. has currently decrease -22.3% in its stock over the period of 6-months while its rival Dollar Tree, Inc. subtracted -18.14% 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 Groupon, Inc. (NASDAQ:GRPN) is 3.9% while the ROI of Dollar Tree, Inc. (NASDAQ:DLTR) is 11.2%. Another figure that is to be considered while analyzing the profitability of a share is its EBITDA margin, GRPN’s EBITDA Margin is 13.27 whereas DLTR’s is 8.98.
Both the profitability ratios suggest a mixed sentiment for Groupon, Inc. (NASDAQ:GRPN) and Dollar Tree, Inc. (NASDAQ:DLTR).
EPS & Surprise Factor
Groupon, Inc. (NASDAQ:GRPN) reported $0.02/share EPS for the previous quarter where analysts were predicting an EPS to be $0.03/share Thus lagging the analyst Estimates with a Surprise Factor of -33.3 Percent. While, Dollar Tree, Inc. (NASDAQ:DLTR) reported EPS of $1.15/share in the last quarter. The analysts projected EPS of $1.16/share depicting a Surprise of -0.9 Percent.
Taking a look at Earnings per Share, Dollar Tree, Inc. tends to be beating the analyst estimates more than Groupon, Inc.. so DLTR is more profitable than GRPN.
Technical Analysis of Groupon, Inc. & Dollar Tree, Inc.
Moving average convergence divergence (MACD) shows that Groupon, Inc. (NASDAQ:GRPN) is on a PRICE RELATIVITY trend While Dollar Tree, Inc. (NASDAQ:DLTR) is on PRICE RELATIVITY trend. The trend for the past 10-days shows that the Groupon, Inc. was in BEARISH territory and Dollar Tree, Inc. was in BULLISH territory.
GRPN’s current statistics gauge that the stock candle is BULLISH with HIGH volatility. While DLTR’s candle is BEARISH with HIGH.
EPS Growth Rate: GRPN’s 35.82% versus DLTR’s 11.8%
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 Groupon, Inc. (NASDAQ:GRPN) is predicted at 35.82% while Dollar Tree, Inc. (NASDAQ:DLTR) stands at 11.8%. These numbers suggest that GRPN 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 GRPN stands at 0.9 while DLTR is at 2.2 whereas the debt ratio of the prior is 0.86 while the debt ratio of the later is 0.67.
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 2.9 for GRPN and 2.3 for DLTR which means GRPN has Hold rating whereas DLTR 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 GRPN is $5.29 which is 33.46% of its current price while DLTR has price target of 96.5 which is 17.61% 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.
GRPN currently has price to earning P/E ratio of 0 whereas DLTR has 16.44 while the forward P/E ratio for the prior stands at 14.19 and for the later it depicts the value of 13.06.
The price to Book P/B for GRPN is 7.33, Price to Sale is at 0.73 and for DLTR these ratios stand at 2.47 and 0.84.