The shares of KB Home (NYSE:KBH) and Wynn Resorts, Limited (NASDAQ:WYNN) were among the active stocks of the last trading sessions. KB Home (NYSE:KBH) declined to -3.24% closing at the price of $20.92 whereas the shares of Wynn Resorts, Limited (NASDAQ:WYNN) soared 0.96% with the increase of 1.11 points closing at the price of $116.22. KB Home has currently decrease -26.47% in its stock over the period of 6-months while its rival Wynn Resorts, Limited subtracted -36.77% 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 KB Home (NYSE:KBH) is 4.3% while the ROI of Wynn Resorts, Limited (NASDAQ:WYNN) is 9.3%. Another figure that is to be considered while analyzing the profitability of a share is its EBITDA margin, KBH’s EBITDA Margin is 9.52 whereas WYNN’s is 11.13.
Both the profitability ratios suggest that Wynn Resorts, Limited (NASDAQ:WYNN) is more suitable investment in terms of profitability and return.
EPS & Surprise Factor
KB Home (NYSE:KBH) reported $0.87/share EPS for the previous quarter where analysts were predicting an EPS to be $0.77/share Thus beating the analyst Estimates with a Surprise Factor of 13 Percent. While, Wynn Resorts, Limited (NASDAQ:WYNN) reported EPS of $1.53/share in the last quarter. The analysts projected EPS of $1.96/share depicting a Surprise of -21.9 Percent.
Taking a look at Earnings per Share, KB Home tends to be beating the analyst estimates more than Wynn Resorts, Limited. so KBH is more profitable than WYNN.
Technical Analysis of KB Home & Wynn Resorts, Limited
Moving average convergence divergence (MACD) shows that KB Home (NYSE:KBH) is on a PRICE RELATIVITY trend While Wynn Resorts, Limited (NASDAQ:WYNN) is on PRICE RELATIVITY trend. The trend for the past 10-days shows that the KB Home was in BEARISH territory and Wynn Resorts, Limited was in BEARISH territory.
KBH’s current statistics gauge that the stock candle is BEARISH with HIGH volatility. While WYNN’s candle is BULLISH with HIGH.
EPS Growth Rate: KBH’s 21.49% versus WYNN’s 14%
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 KB Home (NYSE:KBH) is predicted at 21.49% while Wynn Resorts, Limited (NASDAQ:WYNN) stands at 14%. These numbers suggest that KBH 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 KBH stands at 0 while WYNN is at 1.1 whereas the debt ratio of the prior is 1.23 while the debt ratio of the later is 4.85.
The values of the both ratios suggest that WYNN 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 2.8 for KBH and 2.4 for WYNN which means KBH has Hold rating whereas WYNN 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 KBH is $29 which is 27.86% of its current price while WYNN has price target of 180.81 which is 35.72% 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.
KBH currently has price to earning P/E ratio of 7.74 whereas WYNN has 68.61 while the forward P/E ratio for the prior stands at 6.52 and for the later it depicts the value of 13.18.
The price to Book P/B for KBH is 0.96, Price to Sale is at 0.4 and for WYNN these ratios stand at 7.31 and 1.95.