The shares of Masco Corporation (NYSE:MAS) and Ally Financial Inc. (NYSE:ALLY) were among the active stocks of the last trading sessions. Masco Corporation (NYSE:MAS) declined to -2.34% closing at the price of $32.6 whereas the shares of Ally Financial Inc. (NYSE:ALLY) declined -1.22% with the decrease of -0.32 points closing at the price of $25.96. Masco Corporation has currently decrease -19.8% in its stock over the period of 6-months while its rival Ally Financial Inc. subtracted -4.73% 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 Masco Corporation (NYSE:MAS) is 27.4% while the ROI of Ally Financial Inc. (NYSE:ALLY) is 6.7%. Another figure that is to be considered while analyzing the profitability of a share is its EBITDA margin, MAS’s EBITDA Margin is 10.69 whereas ALLY’s is NOT AVAILABLE.
Both the profitability ratios suggest a mixed sentiment for Masco Corporation (NYSE:MAS) and Ally Financial Inc. (NYSE:ALLY).
EPS & Surprise Factor
Masco Corporation (NYSE:MAS) reported $0.75/share EPS for the previous quarter where analysts were predicting an EPS to be $0.77/share Thus lagging the analyst Estimates with a Surprise Factor of -2.6 Percent. While, Ally Financial Inc. (NYSE:ALLY) reported EPS of $0.83/share in the last quarter. The analysts projected EPS of $0.71/share depicting a Surprise of 16.9 Percent.
Taking a look at Earnings per Share, Ally Financial Inc. tends to be beating the analyst estimates more than Masco Corporation. so ALLY is more profitable than MAS.
Technical Analysis of Masco Corporation & Ally Financial Inc.
Moving average convergence divergence (MACD) shows that Masco Corporation (NYSE:MAS) is on a PRICE RELATIVITY trend While Ally Financial Inc. (NYSE:ALLY) is on PRICE RELATIVITY trend. The trend for the past 10-days shows that the Masco Corporation was in BEARISH territory and Ally Financial Inc. was in BEARISH territory.
MAS’s current statistics gauge that the stock candle is BEARISH with HIGH volatility. While ALLY’s candle is BEARISH with MEDIUM.
EPS Growth Rate: MAS’s 14.77% versus ALLY’s 12.67%
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 Masco Corporation (NYSE:MAS) is predicted at 14.77% while Ally Financial Inc. (NYSE:ALLY) stands at 12.67%. These numbers suggest that MAS 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 MAS stands at 1.7 while ALLY is at 0 whereas the debt ratio of the prior is 0 while the debt ratio of the later is 3.6.
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 2.1 for MAS and 1.9 for ALLY which means MAS has Hold rating whereas ALLY has Buy 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 MAS is $46.78 which is 30.31% of its current price while ALLY has price target of 33.7 which is 22.97% 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.
MAS currently has price to earning P/E ratio of 17.75 whereas ALLY has 9.72 while the forward P/E ratio for the prior stands at 11.23 and for the later it depicts the value of 7.3.
The price to Book P/B for MAS is 0, Price to Sale is at 1.26 and for ALLY these ratios stand at 0.85 and 1.3.