The shares of Philip Morris International Inc (NYSE:PM) and The Kraft Heinz Company (NASDAQ:KHC) were among the active stocks of the last trading sessions. Philip Morris International Inc (NYSE:PM) declined to -2.73% closing at the price of $82.31 whereas the shares of The Kraft Heinz Company (NASDAQ:KHC) declined -3.44% with the decrease of -1.92 points closing at the price of $53.82. Philip Morris International Inc has currently decrease -19.19% in its stock over the period of 6-months while its rival The Kraft Heinz Company subtracted -11.65% 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 Philip Morris International Inc (NYSE:PM) is 39.5% while the ROI of The Kraft Heinz Company (NASDAQ:KHC) is 5.4%. Another figure that is to be considered while analyzing the profitability of a share is its EBITDA margin, PM’s EBITDA Margin is 12.26 whereas KHC’s is 12.21.
Both the profitability ratios suggest that Philip Morris International Inc (NYSE:PM) is more suitable investment in terms of profitability and return.
EPS & Surprise Factor
Philip Morris International Inc (NYSE:PM) reported $1.41/share EPS for the previous quarter where analysts were predicting an EPS to be $1.23/share Thus beating the analyst Estimates with a Surprise Factor of 14.6 Percent. While, The Kraft Heinz Company (NASDAQ:KHC) reported EPS of $1/share in the last quarter. The analysts projected EPS of $0.92/share depicting a Surprise of 8.7 Percent.
Taking a look at Earnings per Share, Philip Morris International Inc tends to be beating the analyst estimates more than The Kraft Heinz Company. so PM is more profitable than KHC.
Technical Analysis of Philip Morris International Inc & The Kraft Heinz Company
Moving average convergence divergence (MACD) shows that Philip Morris International Inc (NYSE:PM) is on a PRICE RELATIVITY trend While The Kraft Heinz Company (NASDAQ:KHC) is on PRICE RELATIVITY trend. The trend for the past 10-days shows that the Philip Morris International Inc was in BULLISH territory and The Kraft Heinz Company was in BEARISH territory.
PM’s current statistics gauge that the stock candle is BEARISH with MEDIUM volatility. While KHC’s candle is BEARISH with HIGH.
EPS Growth Rate: PM’s 7.32% versus KHC’s 4.97%
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 Philip Morris International Inc (NYSE:PM) is predicted at 7.32% while The Kraft Heinz Company (NASDAQ:KHC) stands at 4.97%. These numbers suggest that PM 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 PM stands at 1.1 while KHC is at 1 whereas the debt ratio of the prior is 0 while the debt ratio of the later is 0.52.
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 2.3 for PM and 2.3 for KHC which means PM has Hold rating whereas KHC 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 PM is $91.69 which is 10.23% of its current price while KHC has price target of 67 which is 19.67% 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.
PM currently has price to earning P/E ratio of 15.98 whereas KHC has 17.75 while the forward P/E ratio for the prior stands at 15.52 and for the later it depicts the value of 13.93.
The price to Book P/B for PM is 0, Price to Sale is at 4.21 and for KHC these ratios stand at 1 and 2.49.