The shares of Baidu, Inc. (NASDAQ:BIDU) and HCP, Inc. (NYSE:HCP) were among the active stocks of the last trading sessions. Baidu, Inc. (NASDAQ:BIDU) soared to 1.93% closing at the price of $198 whereas the shares of HCP, Inc. (NYSE:HCP) declined -3.84% with the decrease of -0.99 points closing at the price of $24.81. Baidu, Inc. has currently decrease -13.22% in its stock over the period of 6-months while its rival HCP, Inc. added 10.66% 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 Baidu, Inc. (NASDAQ:BIDU) is 6.4% while the ROI of HCP, Inc. (NYSE:HCP) is 2.6%. Another figure that is to be considered while analyzing the profitability of a share is its EBITDA margin, BIDU’s EBITDA Margin is 13.01 whereas HCP’s is 20.27.
Both the profitability ratios suggest a mixed sentiment for Baidu, Inc. (NASDAQ:BIDU) and HCP, Inc. (NYSE:HCP).
EPS & Surprise Factor
Baidu, Inc. (NASDAQ:BIDU) reported $3.06/share EPS for the previous quarter where analysts were predicting an EPS to be $2.41/share Thus beating the analyst Estimates with a Surprise Factor of 27 Percent. While, HCP, Inc. (NYSE:HCP) reported EPS of $0.19/share in the last quarter. The analysts projected EPS of $0.13/share depicting a Surprise of 46.2 Percent.
Taking a look at Earnings per Share, HCP, Inc. tends to be beating the analyst estimates more than Baidu, Inc.. so HCP is more profitable than BIDU.
Technical Analysis of Baidu, Inc. & HCP, Inc.
Moving average convergence divergence (MACD) shows that Baidu, Inc. (NASDAQ:BIDU) is on a PRICE RELATIVITY trend While HCP, Inc. (NYSE:HCP) is on PRICE RELATIVITY trend. The trend for the past 10-days shows that the Baidu, Inc. was in BEARISH territory and HCP, Inc. was in BEARISH territory.
BIDU’s current statistics gauge that the stock candle is BULLISH with HIGH volatility. While HCP’s candle is BEARISH with MEDIUM.
EPS Growth Rate: BIDU’s 2.75% versus HCP’s 2.5%
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 Baidu, Inc. (NASDAQ:BIDU) is predicted at 2.75% while HCP, Inc. (NYSE:HCP) stands at 2.5%. These numbers suggest that BIDU 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 BIDU stands at 2.2 while HCP is at 0 whereas the debt ratio of the prior is 0.36 while the debt ratio of the later is 1.44.
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 for BIDU and 2.6 for HCP which means BIDU has Buy rating whereas HCP 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 BIDU is $295.58 which is 33.01% of its current price while HCP has price target of 27 which is 8.11% 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.
BIDU currently has price to earning P/E ratio of 19 whereas HCP has 147.68 while the forward P/E ratio for the prior stands at 16.79 and for the later it depicts the value of 46.2.
The price to Book P/B for BIDU is 3.19, Price to Sale is at 5.18 and for HCP these ratios stand at 2.27 and 6.34.