The shares of United Technologies Corporation (NYSE:UTX) and Macy’s Inc (NYSE:M) were among the active stocks of the last trading sessions. United Technologies Corporation (NYSE:UTX) declined to -1.33% closing at the price of $129.37 whereas the shares of Macy’s Inc (NYSE:M) declined -1.89% with the decrease of -0.62 points closing at the price of $32.14. United Technologies Corporation has currently increase 5.43% in its stock over the period of 6-months while its rival Macy’s Inc added 13.73% 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 United Technologies Corporation (NYSE:UTX) is 11.4% while the ROI of Macy’s Inc (NYSE:M) is 10.9%. Another figure that is to be considered while analyzing the profitability of a share is its EBITDA margin, UTX’s EBITDA Margin is 12.27 whereas M’s is 5.53.
Both the profitability ratios suggest that United Technologies Corporation (NYSE:UTX) is more suitable investment in terms of profitability and return.
EPS & Surprise Factor
United Technologies Corporation (NYSE:UTX) reported $1.97/share EPS for the previous quarter where analysts were predicting an EPS to be $1.85/share Thus beating the analyst Estimates with a Surprise Factor of 6.5 Percent. While, Macy’s Inc (NYSE:M) reported EPS of $0.7/share in the last quarter. The analysts projected EPS of $0.51/share depicting a Surprise of 37.3 Percent.
Taking a look at Earnings per Share, Macy’s Inc tends to be beating the analyst estimates more than United Technologies Corporation. so M is more profitable than UTX.
Technical Analysis of United Technologies Corporation & Macy’s Inc
Moving average convergence divergence (MACD) shows that United Technologies Corporation (NYSE:UTX) is on a PRICE RELATIVITY trend While Macy’s Inc (NYSE:M) is on PRICE RELATIVITY trend. The trend for the past 10-days shows that the United Technologies Corporation was in BEARISH territory and Macy’s Inc was in BEARISH territory.
UTX’s current statistics gauge that the stock candle is BEARISH with HIGH volatility. While M’s candle is BEARISH with MEDIUM.
EPS Growth Rate: UTX’s 8.75% versus M’s -0.77%
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 United Technologies Corporation (NYSE:UTX) is predicted at 8.75% while Macy’s Inc (NYSE:M) stands at -0.77%. These numbers suggest that UTX 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 UTX stands at 1.5 while M is at 1.5 whereas the debt ratio of the prior is 0.9 while the debt ratio of the later is 0.94.
The values of the both ratios suggest that M 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 2.1 for UTX and 2.9 for M which means UTX has Hold rating whereas M 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 UTX is $153.29 which is 15.6% of its current price while M has price target of 36 which is 10.72% 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.
UTX currently has price to earning P/E ratio of 17.8 whereas M has 9.05 while the forward P/E ratio for the prior stands at 16.46 and for the later it depicts the value of 8.94.
The price to Book P/B for UTX is 3.26, Price to Sale is at 1.67 and for M these ratios stand at 1.67 and 0.39.