The shares of Target Corporation (NYSE:TGT) and Hormel Foods Corporation (NYSE:HRL) were among the active stocks of the last trading sessions. Target Corporation (NYSE:TGT) declined to -2.82% closing at the price of $82.8 whereas the shares of Hormel Foods Corporation (NYSE:HRL) declined -0.92% with the decrease of -0.37 points closing at the price of $39.68. Target Corporation has currently increase 15.77% in its stock over the period of 6-months while its rival Hormel Foods Corporation added 13.24% 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 Target Corporation (NYSE:TGT) is 13.2% while the ROI of Hormel Foods Corporation (NYSE:HRL) is 16.4%. Another figure that is to be considered while analyzing the profitability of a share is its EBITDA margin, TGT’s EBITDA Margin is 8.28 whereas HRL’s is 17.
Both the profitability ratios suggest that Hormel Foods Corporation (NYSE:HRL) is more suitable investment in terms of profitability and return.
EPS & Surprise Factor
Target Corporation (NYSE:TGT) reported $1.47/share EPS for the previous quarter where analysts were predicting an EPS to be $1.4/share Thus beating the analyst Estimates with a Surprise Factor of 5 Percent. While, Hormel Foods Corporation (NYSE:HRL) reported EPS of $0.39/share in the last quarter. The analysts projected EPS of $0.39/share depicting a Surprise of 0 Percent.
Taking a look at Earnings per Share, Target Corporation tends to be beating the analyst estimates more than Hormel Foods Corporation. so TGT is more profitable than HRL.
Technical Analysis of Target Corporation & Hormel Foods Corporation
Moving average convergence divergence (MACD) shows that Target Corporation (NYSE:TGT) is on a PRICE RELATIVITY trend While Hormel Foods Corporation (NYSE:HRL) is on PRICE RELATIVITY trend. The trend for the past 10-days shows that the Target Corporation was in BEARISH territory and Hormel Foods Corporation was in BULLISH territory.
TGT’s current statistics gauge that the stock candle is BEARISH with HIGH volatility. While HRL’s candle is BEARISH with LOW.
EPS Growth Rate: TGT’s 7.5% versus HRL’s 10.5%
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 Target Corporation (NYSE:TGT) is predicted at 7.5% while Hormel Foods Corporation (NYSE:HRL) stands at 10.5%. These numbers suggest that HRL 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 TGT stands at 0.8 while HRL is at 1.7 whereas the debt ratio of the prior is 1 while the debt ratio of the later is 0.13.
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 2.7 for TGT and 2.8 for HRL which means TGT has Hold rating whereas HRL 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 TGT is $89.01 which is 6.98% of its current price while HRL has price target of 36.92 which is -7.48% 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.
TGT currently has price to earning P/E ratio of 16.57 whereas HRL has 23.89 while the forward P/E ratio for the prior stands at 14.7 and for the later it depicts the value of 21.55.
The price to Book P/B for TGT is 3.94, Price to Sale is at 0.59 and for HRL these ratios stand at 3.91 and 2.22.