The shares of Rite Aid Corporation (NYSE:RAD) and Southwestern Energy Company (NYSE:SWN) were among the active stocks of the last trading sessions. Rite Aid Corporation (NYSE:RAD) declined to -6.31% closing at the price of $1.04 whereas the shares of Southwestern Energy Company (NYSE:SWN) declined -3.27% with the decrease of -0.18 points closing at the price of $5.32. Rite Aid Corporation has currently decrease -38.1% in its stock over the period of 6-months while its rival Southwestern Energy Company added 18.49% 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 Rite Aid Corporation (NYSE:RAD) is 3% while the ROI of Southwestern Energy Company (NYSE:SWN) is 11.8%. Another figure that is to be considered while analyzing the profitability of a share is its EBITDA margin, RAD’s EBITDA Margin is 9.9 whereas SWN’s is 4.81.
Both the profitability ratios suggest a mixed sentiment for Rite Aid Corporation (NYSE:RAD) and Southwestern Energy Company (NYSE:SWN).
EPS & Surprise Factor
Rite Aid Corporation (NYSE:RAD) reported $-0.01/share EPS for the previous quarter where analysts were predicting an EPS to be $-0.01/share Thus meeting the analyst Estimates with a Surprise Factor of 0 Percent. While, Southwestern Energy Company (NYSE:SWN) reported EPS of $0.18/share in the last quarter. The analysts projected EPS of $0.16/share depicting a Surprise of 12.5 Percent.
Taking a look at Earnings per Share, Southwestern Energy Company tends to be beating the analyst estimates more than Rite Aid Corporation. so SWN is more profitable than RAD.
Technical Analysis of Rite Aid Corporation & Southwestern Energy Company
Moving average convergence divergence (MACD) shows that Rite Aid Corporation (NYSE:RAD) is on a PRICE RELATIVITY trend While Southwestern Energy Company (NYSE:SWN) is on PRICE RELATIVITY trend. The trend for the past 10-days shows that the Rite Aid Corporation was in BEARISH territory and Southwestern Energy Company was in BULLISH territory.
RAD’s current statistics gauge that the stock candle is BEARISH with HIGH volatility. While SWN’s candle is BEARISH with MEDIUM.
EPS Growth Rate: RAD’s -3.69% versus SWN’s 2.64%
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 Rite Aid Corporation (NYSE:RAD) is predicted at -3.69% while Southwestern Energy Company (NYSE:SWN) stands at 2.64%. These numbers suggest that SWN 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 RAD stands at 1.6 while SWN is at 0.7 whereas the debt ratio of the prior is 2.42 while the debt ratio of the later is 0.
The values of the both ratios suggest that RAD 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 3.3 for RAD and 3 for SWN which means RAD has Sell rating whereas SWN 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 RAD is $1.31 which is 20.61% of its current price while SWN has price target of 6.22 which is 14.47% 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.
RAD currently has price to earning P/E ratio of 0 whereas SWN has 5.04 while the forward P/E ratio for the prior stands at 18.25 and for the later it depicts the value of 6.7.
The price to Book P/B for RAD is 0.75, Price to Sale is at 0.05 and for SWN these ratios stand at 1.37 and 0.95.