The shares of Abbott Laboratories (NYSE:ABT) and CA Inc. (NASDAQ:CA) were among the active stocks of the last trading sessions. Abbott Laboratories (NYSE:ABT) declined to -0.78% closing at the price of $68.38 whereas the shares of CA Inc. (NASDAQ:CA) soared 1.49% with the increase of 0.64 points closing at the price of $43.47. Abbott Laboratories has currently increase 16.91% in its stock over the period of 6-months while its rival CA Inc. added 25.96% 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 Abbott Laboratories (NYSE:ABT) is 2.2% while the ROI of CA Inc. (NASDAQ:CA) is 10%. Another figure that is to be considered while analyzing the profitability of a share is its EBITDA margin, ABT’s EBITDA Margin is 20.97 whereas CA’s is 14.37.
Both the profitability ratios suggest a mixed sentiment for Abbott Laboratories (NYSE:ABT) and CA Inc. (NASDAQ:CA).
EPS & Surprise Factor
Abbott Laboratories (NYSE:ABT) reported $0.73/share EPS for the previous quarter where analysts were predicting an EPS to be $0.71/share Thus beating the analyst Estimates with a Surprise Factor of 2.8 Percent. While, CA Inc. (NASDAQ:CA) reported EPS of $0.76/share in the last quarter. The analysts projected EPS of $0.68/share depicting a Surprise of 11.8 Percent.
Taking a look at Earnings per Share, CA Inc. tends to be beating the analyst estimates more than Abbott Laboratories. so CA is more profitable than ABT.
Technical Analysis of Abbott Laboratories & CA Inc.
Moving average convergence divergence (MACD) shows that Abbott Laboratories (NYSE:ABT) is on a PRICE RELATIVITY trend While CA Inc. (NASDAQ:CA) is on PRICE RELATIVITY trend. The trend for the past 10-days shows that the Abbott Laboratories was in BEARISH territory and CA Inc. was in BEARISH territory.
ABT’s current statistics gauge that the stock candle is BEARISH with HIGH volatility. While CA’s candle is BULLISH with HIGH.
EPS Growth Rate: ABT’s 11.84% versus CA’s 5.52%
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 Abbott Laboratories (NYSE:ABT) is predicted at 11.84% while CA Inc. (NASDAQ:CA) stands at 5.52%. These numbers suggest that ABT 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 ABT stands at 1.6 while CA is at 2.2 whereas the debt ratio of the prior is 0.68 while the debt ratio of the later is 0.35.
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 1.8 for ABT and 3 for CA which means ABT has Buy rating whereas CA 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 ABT is $72.81 which is 6.08% of its current price while CA has price target of 42.51 which is -2.26% 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.
ABT currently has price to earning P/E ratio of 52.32 whereas CA has 17.27 while the forward P/E ratio for the prior stands at 21.14 and for the later it depicts the value of 15.14.
The price to Book P/B for ABT is 3.93, Price to Sale is at 4.07 and for CA these ratios stand at 2.28 and 4.38.