The shares of Aptiv PLC (NYSE:APTV) and Telefonica SA (NYSE:TEF) were among the active stocks of the last trading sessions. Aptiv PLC (NYSE:APTV) declined to -2.26% closing at the price of $73.92 whereas the shares of Telefonica SA (NYSE:TEF) declined -0.74% with the decrease of -0.06 points closing at the price of $8.06. Aptiv PLC has currently decrease -13.55% in its stock over the period of 6-months while its rival Telefonica SA subtracted -19.48% 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 Aptiv PLC (NYSE:APTV) is 16.4% while the ROI of Telefonica SA (NYSE:TEF) is 8%. Another figure that is to be considered while analyzing the profitability of a share is its EBITDA margin, APTV’s EBITDA Margin is 10.86 whereas TEF’s is 6.38.
Both the profitability ratios suggest that Aptiv PLC (NYSE:APTV) is more suitable investment in terms of profitability and return.
EPS & Surprise Factor
Technical Analysis of Aptiv PLC & Telefonica SA
Moving average convergence divergence (MACD) shows that Aptiv PLC (NYSE:APTV) is on a PRICE RELATIVITY trend While Telefonica SA (NYSE:TEF) is on PRICE RELATIVITY trend. The trend for the past 10-days shows that the Aptiv PLC was in BEARISH territory and Telefonica SA was in BULLISH territory.
APTV’s current statistics gauge that the stock candle is BEARISH with HIGH volatility. While TEF’s candle is BEARISH with MEDIUM.
EPS Growth Rate: APTV’s 13.37% versus TEF’s 52.9%
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 Aptiv PLC (NYSE:APTV) is predicted at 13.37% while Telefonica SA (NYSE:TEF) stands at 52.9%. These numbers suggest that TEF 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 APTV stands at 1.6 while TEF is at 0.7 whereas the debt ratio of the prior is 1.16 while the debt ratio of the later is 3.7.
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 1.9 for APTV and 1 for TEF which means APTV has Buy rating whereas TEF has Strong 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 APTV is $106.33 which is 30.48% of its current price while TEF has price target of 12.65 which is 36.28% 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.
APTV currently has price to earning P/E ratio of 17.61 whereas TEF has 12.36 while the forward P/E ratio for the prior stands at 12.5 and for the later it depicts the value of 7.83.
The price to Book P/B for APTV is 5.56, Price to Sale is at 1.48 and for TEF these ratios stand at 3.24 and 0.72.