The shares of Ambev S.A. (NYSE:ABEV) and Oracle Corporation (NYSE:ORCL) were among the active stocks of the last trading sessions. Ambev S.A. (NYSE:ABEV) declined to -1.98% closing at the price of $4.46 whereas the shares of Oracle Corporation (NYSE:ORCL) declined -1.31% with the decrease of -0.62 points closing at the price of $46.78. Ambev S.A. has currently decrease -33.93% in its stock over the period of 6-months while its rival Oracle Corporation added 1.52% 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 Ambev S.A. (NYSE:ABEV) is 0% while the ROI of Oracle Corporation (NYSE:ORCL) is 10.8%. Another figure that is to be considered while analyzing the profitability of a share is its EBITDA margin, ABEV’s EBITDA Margin is 13.13 whereas ORCL’s is 11.49.
Both the profitability ratios suggest a mixed sentiment for Ambev S.A. (NYSE:ABEV) and Oracle Corporation (NYSE:ORCL).
EPS & Surprise Factor
Ambev S.A. (NYSE:ABEV) reported $0.04/share EPS for the previous quarter where analysts were predicting an EPS to be $0.04/share Thus meeting the analyst Estimates with a Surprise Factor of 0 Percent. While, Oracle Corporation (NYSE:ORCL) reported EPS of $0.71/share in the last quarter. The analysts projected EPS of $0.69/share depicting a Surprise of 2.9 Percent.
Taking a look at Earnings per Share, Oracle Corporation tends to be beating the analyst estimates more than Ambev S.A.. so ORCL is more profitable than ABEV.
Technical Analysis of Ambev S.A. & Oracle Corporation
Moving average convergence divergence (MACD) shows that Ambev S.A. (NYSE:ABEV) is on a PRICE RELATIVITY trend While Oracle Corporation (NYSE:ORCL) is on PRICE RELATIVITY trend. The trend for the past 10-days shows that the Ambev S.A. was in BEARISH territory and Oracle Corporation was in BEARISH territory.
ABEV’s current statistics gauge that the stock candle is BEARISH with MEDIUM volatility. While ORCL’s candle is BEARISH with HIGH.
EPS Growth Rate: ABEV’s 21.45% versus ORCL’s 8.47%
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 Ambev S.A. (NYSE:ABEV) is predicted at 21.45% while Oracle Corporation (NYSE:ORCL) stands at 8.47%. These numbers suggest that ABEV 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 ABEV stands at 0 while ORCL is at 3.4 whereas the debt ratio of the prior is 0 while the debt ratio of the later is 1.53.
The values of the both ratios suggest that ORCL 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 2.7 for ABEV and 2.4 for ORCL which means ABEV has Hold rating whereas ORCL 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 ABEV is $5.63 which is 20.78% of its current price while ORCL has price target of 53.14 which is 11.97% 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.
ABEV currently has price to earning P/E ratio of 34.05 whereas ORCL has 17.87 while the forward P/E ratio for the prior stands at 18.58 and for the later it depicts the value of 12.83.
The price to Book P/B for ABEV is 5.1, Price to Sale is at 5.38 and for ORCL these ratios stand at 4.8 and 4.46.