The shares of McDermott International, Inc. (NYSE:MDR) and Chubb Limited (NYSE:CB) were among the active stocks of the last trading sessions. McDermott International, Inc. (NYSE:MDR) declined to -4.52% closing at the price of $16.28 whereas the shares of Chubb Limited (NYSE:CB) declined -4.24% with the decrease of -5.62 points closing at the price of $126.82. McDermott International, Inc. has currently decrease -11.9% in its stock over the period of 6-months while its rival Chubb Limited subtracted -5.36% 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 McDermott International, Inc. (NYSE:MDR) is 14.9% while the ROI of Chubb Limited (NYSE:CB) is 5.5%. Another figure that is to be considered while analyzing the profitability of a share is its EBITDA margin, MDR’s EBITDA Margin is 10.59 whereas CB’s is 16.98.
Both the profitability ratios suggest a mixed sentiment for McDermott International, Inc. (NYSE:MDR) and Chubb Limited (NYSE:CB).
EPS & Surprise Factor
McDermott International, Inc. (NYSE:MDR) reported $0.29/share EPS for the previous quarter where analysts were predicting an EPS to be $0.22/share Thus beating the analyst Estimates with a Surprise Factor of 31.8 Percent. While, Chubb Limited (NYSE:CB) reported EPS of $2.68/share in the last quarter. The analysts projected EPS of $2.62/share depicting a Surprise of 2.3 Percent.
Taking a look at Earnings per Share, McDermott International, Inc. tends to be beating the analyst estimates more than Chubb Limited. so MDR is more profitable than CB.
Technical Analysis of McDermott International, Inc. & Chubb Limited
Moving average convergence divergence (MACD) shows that McDermott International, Inc. (NYSE:MDR) is on a PRICE RELATIVITY trend While Chubb Limited (NYSE:CB) is on PRICE RELATIVITY trend. The trend for the past 10-days shows that the McDermott International, Inc. was in BEARISH territory and Chubb Limited was in BEARISH territory.
MDR’s current statistics gauge that the stock candle is BEARISH with MEDIUM volatility. While CB’s candle is BEARISH with HIGH.
EPS Growth Rate: MDR’s 65.74% versus CB’s 9.95%
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 McDermott International, Inc. (NYSE:MDR) is predicted at 65.74% while Chubb Limited (NYSE:CB) stands at 9.95%. These numbers suggest that MDR 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 MDR stands at 0.9 while CB is at 0 whereas the debt ratio of the prior is 0.98 while the debt ratio of the later is 0.26.
The values of the both ratios suggest that MDR 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 2.4 for MDR and 2.2 for CB which means MDR has Hold rating whereas CB 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 MDR is $27.18 which is 40.1% of its current price while CB has price target of 157.67 which is 19.57% 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.
MDR currently has price to earning P/E ratio of 5.71 whereas CB has 17.56 while the forward P/E ratio for the prior stands at 8.02 and for the later it depicts the value of 11.29.
The price to Book P/B for MDR is 0.66, Price to Sale is at 0.71 and for CB these ratios stand at 1.16 and 1.78.