The shares of HSBC Holdings plc (NYSE:HSBC) and CBS Corporation (NYSE:CBS) were among the active stocks of the last trading sessions. HSBC Holdings plc (NYSE:HSBC) declined to -3.22% closing at the price of $41.78 whereas the shares of CBS Corporation (NYSE:CBS) declined -3.08% with the decrease of -1.71 points closing at the price of $53.82. HSBC Holdings plc has currently decrease -14.96% in its stock over the period of 6-months while its rival CBS Corporation added 7.49% 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 HSBC Holdings plc (NYSE:HSBC) is 5.9% while the ROI of CBS Corporation (NYSE:CBS) is 17.7%. Another figure that is to be considered while analyzing the profitability of a share is its EBITDA margin, HSBC’s EBITDA Margin is NOT AVAILABLE whereas CBS’s is 9.77.
Both the profitability ratios suggest a mixed sentiment for HSBC Holdings plc (NYSE:HSBC) and CBS Corporation (NYSE:CBS).
EPS & Surprise Factor
Technical Analysis of HSBC Holdings plc & CBS Corporation
Moving average convergence divergence (MACD) shows that HSBC Holdings plc (NYSE:HSBC) is on a PRICE RELATIVITY trend While CBS Corporation (NYSE:CBS) is on PRICE RELATIVITY trend. The trend for the past 10-days shows that the HSBC Holdings plc was in BEARISH territory and CBS Corporation was in BEARISH territory.
HSBC’s current statistics gauge that the stock candle is BEARISH with HIGH volatility. While CBS’s candle is BEARISH with HIGH.
EPS Growth Rate: HSBC’s 0% versus CBS’s 17.68%
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 HSBC Holdings plc (NYSE:HSBC) is predicted at 0% while CBS Corporation (NYSE:CBS) stands at 17.68%. These numbers suggest that CBS 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 HSBC stands at 0 while CBS is at 1.6 whereas the debt ratio of the prior is 0.64 while the debt ratio of the later is 4.55.
The values of the both ratios suggest that CBS 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 1 for HSBC and 2.3 for CBS which means HSBC has Strong Buy rating whereas CBS 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 HSBC is $51.71 which is 19.2% of its current price while CBS has price target of 64.62 which is 16.71% 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.
HSBC currently has price to earning P/E ratio of 15.07 whereas CBS has 11.82 while the forward P/E ratio for the prior stands at 11.02 and for the later it depicts the value of 9.2.
The price to Book P/B for HSBC is 1.03, Price to Sale is at 3.71 and for CBS these ratios stand at 9.39 and 1.43.