The shares of MGM Resorts International (NYSE:MGM) and Halliburton Company (NYSE:HAL) were among the active stocks of the last trading sessions. MGM Resorts International (NYSE:MGM) declined to -1.07% closing at the price of $25.95 whereas the shares of Halliburton Company (NYSE:HAL) declined -2.19% with the decrease of -0.89 points closing at the price of $39.75. MGM Resorts International has currently decrease -24.56% in its stock over the period of 6-months while its rival Halliburton Company subtracted -21.72% 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 MGM Resorts International (NYSE:MGM) is 7.1% while the ROI of Halliburton Company (NYSE:HAL) is 5.2%. Another figure that is to be considered while analyzing the profitability of a share is its EBITDA margin, MGM’s EBITDA Margin is 12.58 whereas HAL’s is 10.37.
Both the profitability ratios suggest that MGM Resorts International (NYSE:MGM) is more suitable investment in terms of profitability and return.
EPS & Surprise Factor
MGM Resorts International (NYSE:MGM) reported $0.26/share EPS for the previous quarter where analysts were predicting an EPS to be $0.29/share Thus lagging the analyst Estimates with a Surprise Factor of -10.3 Percent. While, Halliburton Company (NYSE:HAL) reported EPS of $0.58/share in the last quarter. The analysts projected EPS of $0.58/share depicting a Surprise of 0 Percent.
Taking a look at Earnings per Share, Halliburton Company tends to be beating the analyst estimates more than MGM Resorts International. so HAL is more profitable than MGM.
Technical Analysis of MGM Resorts International & Halliburton Company
Moving average convergence divergence (MACD) shows that MGM Resorts International (NYSE:MGM) is on a PRICE RELATIVITY trend While Halliburton Company (NYSE:HAL) is on PRICE RELATIVITY trend. The trend for the past 10-days shows that the MGM Resorts International was in BEARISH territory and Halliburton Company was in BEARISH territory.
MGM’s current statistics gauge that the stock candle is BEARISH with MEDIUM volatility. While HAL’s candle is BEARISH with MEDIUM.
EPS Growth Rate: MGM’s 9.1% versus HAL’s 44.7%
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 MGM Resorts International (NYSE:MGM) is predicted at 9.1% while Halliburton Company (NYSE:HAL) stands at 44.7%. These numbers suggest that HAL 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 MGM stands at 0.7 while HAL is at 2.2 whereas the debt ratio of the prior is 1.97 while the debt ratio of the later is 1.23.
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 MGM and 1.8 for HAL which means MGM has Hold rating whereas HAL 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 MGM is $35.21 which is 26.3% of its current price while HAL has price target of 51.5 which is 22.82% 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.
MGM currently has price to earning P/E ratio of 32.08 whereas HAL has 39.32 while the forward P/E ratio for the prior stands at 19.19 and for the later it depicts the value of 15.93.
The price to Book P/B for MGM is 2.08, Price to Sale is at 1.29 and for HAL these ratios stand at 3.95 and 1.5.