The shares of Colgate-Palmolive Company (NYSE:CL) and Eli Lilly and Company (NYSE:LLY) were among the active stocks of the last trading sessions. Colgate-Palmolive Company (NYSE:CL) declined to -2.32% closing at the price of $62.35 whereas the shares of Eli Lilly and Company (NYSE:LLY) declined -4.79% with the decrease of -5.43 points closing at the price of $107.91. Colgate-Palmolive Company has currently decrease -12.92% in its stock over the period of 6-months while its rival Eli Lilly and Company added 35.36% 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 Colgate-Palmolive Company (NYSE:CL) is 39.1% while the ROI of Eli Lilly and Company (NYSE:LLY) is 6.6%. Another figure that is to be considered while analyzing the profitability of a share is its EBITDA margin, CL’s EBITDA Margin is 14.04 whereas LLY’s is 16.8.
Both the profitability ratios suggest a mixed sentiment for Colgate-Palmolive Company (NYSE:CL) and Eli Lilly and Company (NYSE:LLY).
EPS & Surprise Factor
Colgate-Palmolive Company (NYSE:CL) reported $0.77/share EPS for the previous quarter where analysts were predicting an EPS to be $0.77/share Thus meeting the analyst Estimates with a Surprise Factor of 0 Percent. While, Eli Lilly and Company (NYSE:LLY) reported EPS of $1.5/share in the last quarter. The analysts projected EPS of $1.3/share depicting a Surprise of 15.4 Percent.
Taking a look at Earnings per Share, Eli Lilly and Company tends to be beating the analyst estimates more than Colgate-Palmolive Company. so LLY is more profitable than CL.
Technical Analysis of Colgate-Palmolive Company & Eli Lilly and Company
Moving average convergence divergence (MACD) shows that Colgate-Palmolive Company (NYSE:CL) is on a PRICE RELATIVITY trend While Eli Lilly and Company (NYSE:LLY) is on PRICE RELATIVITY trend. The trend for the past 10-days shows that the Colgate-Palmolive Company was in BEARISH territory and Eli Lilly and Company was in BULLISH territory.
CL’s current statistics gauge that the stock candle is BEARISH with HIGH volatility. While LLY’s candle is BEARISH with HIGH.
EPS Growth Rate: CL’s 6.37% versus LLY’s 11.29%
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 Colgate-Palmolive Company (NYSE:CL) is predicted at 6.37% while Eli Lilly and Company (NYSE:LLY) stands at 11.29%. These numbers suggest that LLY 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 CL stands at 1.1 while LLY is at 1.4 whereas the debt ratio of the prior is 0 while the debt ratio of the later is 1.06.
The values of the both ratios suggest that LLY 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 CL and 2.4 for LLY which means CL has Hold rating whereas LLY 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 CL is $68.95 which is 9.57% of its current price while LLY has price target of 102.14 which is -5.65% 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.
CL currently has price to earning P/E ratio of 22.18 whereas LLY has 64.23 while the forward P/E ratio for the prior stands at 19.37 and for the later it depicts the value of 18.79.
The price to Book P/B for CL is 0, Price to Sale is at 3.45 and for LLY these ratios stand at 9.62 and 4.77.