The shares of Coca-Cola Company (The) (NYSE:KO) and Yamana Gold Inc. (NYSE:AUY) were among the active stocks of the last trading sessions. Coca-Cola Company (The) (NYSE:KO) declined to -2.28% closing at the price of $44.64 whereas the shares of Yamana Gold Inc. (NYSE:AUY) soared 7.54% with the increase of 0.19 points closing at the price of $2.71. Coca-Cola Company (The) has currently increase 0.29% in its stock over the period of 6-months while its rival Yamana Gold Inc. subtracted -6.87% 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 Coca-Cola Company (The) (NYSE:KO) is 12.5% while the ROI of Yamana Gold Inc. (NYSE:AUY) is -1.1%. Another figure that is to be considered while analyzing the profitability of a share is its EBITDA margin, KO’s EBITDA Margin is 20.43 whereas AUY’s is 6.55.
Both the profitability ratios suggest that Coca-Cola Company (The) (NYSE:KO) is more suitable investment in terms of profitability and return.
EPS & Surprise Factor
Coca-Cola Company (The) (NYSE:KO) reported $0.61/share EPS for the previous quarter where analysts were predicting an EPS to be $0.6/share Thus beating the analyst Estimates with a Surprise Factor of 1.7 Percent. While, Yamana Gold Inc. (NYSE:AUY) reported EPS of $0.06/share in the last quarter. The analysts projected EPS of $0.03/share depicting a Surprise of 100 Percent.
Taking a look at Earnings per Share, Yamana Gold Inc. tends to be beating the analyst estimates more than Coca-Cola Company (The). so AUY is more profitable than KO.
Technical Analysis of Coca-Cola Company (The) & Yamana Gold Inc.
Moving average convergence divergence (MACD) shows that Coca-Cola Company (The) (NYSE:KO) is on a PRICE RELATIVITY trend While Yamana Gold Inc. (NYSE:AUY) is on PRICE RELATIVITY trend. The trend for the past 10-days shows that the Coca-Cola Company (The) was in BEARISH territory and Yamana Gold Inc. was in BULLISH territory.
KO’s current statistics gauge that the stock candle is BEARISH with HIGH volatility. While AUY’s candle is BULLISH with HIGH.
EPS Growth Rate: KO’s 7.16% versus AUY’s -8.26%
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 Coca-Cola Company (The) (NYSE:KO) is predicted at 7.16% while Yamana Gold Inc. (NYSE:AUY) stands at -8.26%. These numbers suggest that KO 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 KO stands at 1.1 while AUY is at 1 whereas the debt ratio of the prior is 2.55 while the debt ratio of the later is 0.43.
The values of the both ratios suggest that KO is more suitable investment when the liquidity and risk is the main concern.
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 2.3 for KO and 2.6 for AUY which means KO has Hold rating whereas AUY 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 KO is $50.98 which is 12.44% of its current price while AUY has price target of 3.86 which is 29.79% 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.
KO currently has price to earning P/E ratio of 32.49 whereas AUY has 0 while the forward P/E ratio for the prior stands at 19.98 and for the later it depicts the value of 17.71.
The price to Book P/B for KO is 10.36, Price to Sale is at 5.72 and for AUY these ratios stand at 0.62 and 1.39.