The shares of Verizon Communications Inc. (NYSE:VZ) and QUALCOMM Incorporated (NASDAQ:QCOM) were among the active stocks of the last trading sessions. Verizon Communications Inc. (NYSE:VZ) declined to -1.84% closing at the price of $53.33 whereas the shares of QUALCOMM Incorporated (NASDAQ:QCOM) declined -3.66% with the decrease of -2.44 points closing at the price of $64.29. Verizon Communications Inc. has currently increase 11.9% in its stock over the period of 6-months while its rival QUALCOMM Incorporated added 15.36% 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 Verizon Communications Inc. (NYSE:VZ) is 11.6% while the ROI of QUALCOMM Incorporated (NASDAQ:QCOM) is 3.6%. Another figure that is to be considered while analyzing the profitability of a share is its EBITDA margin, VZ’s EBITDA Margin is 7.31 whereas QCOM’s is 13.19.
Both the profitability ratios suggest a mixed sentiment for Verizon Communications Inc. (NYSE:VZ) and QUALCOMM Incorporated (NASDAQ:QCOM).
EPS & Surprise Factor
Verizon Communications Inc. (NYSE:VZ) reported $1.2/share EPS for the previous quarter where analysts were predicting an EPS to be $1.14/share Thus beating the analyst Estimates with a Surprise Factor of 5.3 Percent. While, QUALCOMM Incorporated (NASDAQ:QCOM) reported EPS of $1.01/share in the last quarter. The analysts projected EPS of $0.71/share depicting a Surprise of 42.3 Percent.
Taking a look at Earnings per Share, QUALCOMM Incorporated tends to be beating the analyst estimates more than Verizon Communications Inc.. so QCOM is more profitable than VZ.
Technical Analysis of Verizon Communications Inc. & QUALCOMM Incorporated
Moving average convergence divergence (MACD) shows that Verizon Communications Inc. (NYSE:VZ) is on a PRICE RELATIVITY trend While QUALCOMM Incorporated (NASDAQ:QCOM) is on PRICE RELATIVITY trend. The trend for the past 10-days shows that the Verizon Communications Inc. was in BULLISH territory and QUALCOMM Incorporated was in BEARISH territory.
VZ’s current statistics gauge that the stock candle is BEARISH with HIGH volatility. While QCOM’s candle is BEARISH with HIGH.
EPS Growth Rate: VZ’s 5.99% versus QCOM’s 10.6%
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 Verizon Communications Inc. (NYSE:VZ) is predicted at 5.99% while QUALCOMM Incorporated (NASDAQ:QCOM) stands at 10.6%. These numbers suggest that QCOM 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 VZ stands at 1 while QCOM is at 2.7 whereas the debt ratio of the prior is 2.2 while the debt ratio of the later is 0.97.
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 2.4 for VZ and 2.3 for QCOM which means VZ has Hold rating whereas QCOM 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 VZ is $56.58 which is 5.74% of its current price while QCOM has price target of 72.62 which is 11.47% 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.
VZ currently has price to earning P/E ratio of 15.48 whereas QCOM has 0 while the forward P/E ratio for the prior stands at 11.24 and for the later it depicts the value of 14.74.
The price to Book P/B for VZ is 4.24, Price to Sale is at 1.7 and for QCOM these ratios stand at 4.12 and 4.2.