The shares of Walt Disney Company (The) (NYSE:DIS) and AbbVie Inc. (NYSE:ABBV) were among the active stocks of the last trading sessions. Walt Disney Company (The) (NYSE:DIS) declined to -1.52% closing at the price of $111.15 whereas the shares of AbbVie Inc. (NYSE:ABBV) declined -2.56% with the decrease of -2.38 points closing at the price of $90.7. Walt Disney Company (The) has currently increase 10.76% in its stock over the period of 6-months while its rival AbbVie Inc. subtracted -1.23% 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 Walt Disney Company (The) (NYSE:DIS) is 14.2% while the ROI of AbbVie Inc. (NYSE:ABBV) is 17.8%. Another figure that is to be considered while analyzing the profitability of a share is its EBITDA margin, DIS’s EBITDA Margin is 11.2 whereas ABBV’s is 13.66.
Both the profitability ratios suggest that AbbVie Inc. (NYSE:ABBV) is more suitable investment in terms of profitability and return.
EPS & Surprise Factor
Walt Disney Company (The) (NYSE:DIS) reported $1.87/share EPS for the previous quarter where analysts were predicting an EPS to be $1.95/share Thus lagging the analyst Estimates with a Surprise Factor of -4.1 Percent. While, AbbVie Inc. (NYSE:ABBV) reported EPS of $2/share in the last quarter. The analysts projected EPS of $1.97/share depicting a Surprise of 1.5 Percent.
Taking a look at Earnings per Share, AbbVie Inc. tends to be beating the analyst estimates more than Walt Disney Company (The). so ABBV is more profitable than DIS.
Technical Analysis of Walt Disney Company (The) & AbbVie Inc.
Moving average convergence divergence (MACD) shows that Walt Disney Company (The) (NYSE:DIS) is on a PRICE RELATIVITY trend While AbbVie Inc. (NYSE:ABBV) is on PRICE RELATIVITY trend. The trend for the past 10-days shows that the Walt Disney Company (The) was in BEARISH territory and AbbVie Inc. was in BEARISH territory.
DIS’s current statistics gauge that the stock candle is BEARISH with HIGH volatility. While ABBV’s candle is BEARISH with MEDIUM.
EPS Growth Rate: DIS’s 11.27% versus ABBV’s 15.36%
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 Walt Disney Company (The) (NYSE:DIS) is predicted at 11.27% while AbbVie Inc. (NYSE:ABBV) stands at 15.36%. These numbers suggest that ABBV 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 DIS stands at 0.9 while ABBV is at 0.8 whereas the debt ratio of the prior is 0.51 while the debt ratio of the later is 0.
The values of the both ratios suggest that DIS 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 2.5 for DIS and 2.5 for ABBV which means DIS has Hold rating whereas ABBV 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 DIS is $119.13 which is 6.7% of its current price while ABBV has price target of 109.83 which is 17.42% 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.
DIS currently has price to earning P/E ratio of 16.49 whereas ABBV has 21.17 while the forward P/E ratio for the prior stands at 15.08 and for the later it depicts the value of 10.2.
The price to Book P/B for DIS is 3.6, Price to Sale is at 2.89 and for ABBV these ratios stand at 0 and 4.6.