The shares of Alibaba Group Holding Limited (NYSE:BABA) and Pfizer, Inc. (NYSE:PFE) were among the active stocks of the last trading sessions. Alibaba Group Holding Limited (NYSE:BABA) soared to 2.61% closing at the price of $141.9 whereas the shares of Pfizer, Inc. (NYSE:PFE) declined -3.82% with the decrease of -1.7 points closing at the price of $42.81. Alibaba Group Holding Limited has currently decrease -17.52% in its stock over the period of 6-months while its rival Pfizer, Inc. added 17.87% 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 Alibaba Group Holding Limited (NYSE:BABA) is 10% while the ROI of Pfizer, Inc. (NYSE:PFE) is 11%. Another figure that is to be considered while analyzing the profitability of a share is its EBITDA margin, BABA’s EBITDA Margin is 30.8 whereas PFE’s is 13.56.
Both the profitability ratios suggest a mixed sentiment for Alibaba Group Holding Limited (NYSE:BABA) and Pfizer, Inc. (NYSE:PFE).
EPS & Surprise Factor
Alibaba Group Holding Limited (NYSE:BABA) reported $1.17/share EPS for the previous quarter where analysts were predicting an EPS to be $1.19/share Thus lagging the analyst Estimates with a Surprise Factor of -1.7 Percent. While, Pfizer, Inc. (NYSE:PFE) reported EPS of $0.81/share in the last quarter. The analysts projected EPS of $0.74/share depicting a Surprise of 9.5 Percent.
Taking a look at Earnings per Share, Pfizer, Inc. tends to be beating the analyst estimates more than Alibaba Group Holding Limited. so PFE is more profitable than BABA.
Technical Analysis of Alibaba Group Holding Limited & Pfizer, Inc.
Moving average convergence divergence (MACD) shows that Alibaba Group Holding Limited (NYSE:BABA) is on a PRICE RELATIVITY trend While Pfizer, Inc. (NYSE:PFE) is on PRICE RELATIVITY trend. The trend for the past 10-days shows that the Alibaba Group Holding Limited was in BEARISH territory and Pfizer, Inc. was in BEARISH territory.
BABA’s current statistics gauge that the stock candle is BULLISH with HIGH volatility. While PFE’s candle is BEARISH with HIGH.
EPS Growth Rate: BABA’s 4.47% versus PFE’s 7.64%
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 Alibaba Group Holding Limited (NYSE:BABA) is predicted at 4.47% while Pfizer, Inc. (NYSE:PFE) stands at 7.64%. These numbers suggest that PFE 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 BABA stands at 1.4 while PFE is at 1.2 whereas the debt ratio of the prior is 0.35 while the debt ratio of the later is 0.58.
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 1.6 for BABA and 2.7 for PFE which means BABA has Buy rating whereas PFE 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 BABA is $229.21 which is 38.09% of its current price while PFE has price target of 42.47 which is -0.8% 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.
BABA currently has price to earning P/E ratio of 43.95 whereas PFE has 19.61 while the forward P/E ratio for the prior stands at 18.81 and for the later it depicts the value of 13.83.
The price to Book P/B for BABA is 6.4, Price to Sale is at 9.08 and for PFE these ratios stand at 3.6 and 4.72.