The shares of Zayo Group Holdings, Inc. (NYSE:ZAYO) and Home Depot, Inc. (The) (NYSE:HD) were among the active stocks of the last trading sessions. Zayo Group Holdings, Inc. (NYSE:ZAYO) declined to -1.93% closing at the price of $30.93 whereas the shares of Home Depot, Inc. (The) (NYSE:HD) declined -2.04% with the decrease of -3.96 points closing at the price of $189.74. Zayo Group Holdings, Inc. has currently decrease -14.11% in its stock over the period of 6-months while its rival Home Depot, Inc. (The) added 9.8% 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 Zayo Group Holdings, Inc. (NYSE:ZAYO) is 5.7% while the ROI of Home Depot, Inc. (The) (NYSE:HD) is 35.2%. Another figure that is to be considered while analyzing the profitability of a share is its EBITDA margin, ZAYO’s EBITDA Margin is 11.51 whereas HD’s is 14.29.
Both the profitability ratios suggest that Home Depot, Inc. (The) (NYSE:HD) is more suitable investment in terms of profitability and return.
EPS & Surprise Factor
Zayo Group Holdings, Inc. (NYSE:ZAYO) reported $0.18/share EPS for the previous quarter where analysts were predicting an EPS to be $0.09/share Thus beating the analyst Estimates with a Surprise Factor of 100 Percent. While, Home Depot, Inc. (The) (NYSE:HD) reported EPS of $3.05/share in the last quarter. The analysts projected EPS of $2.84/share depicting a Surprise of 7.4 Percent.
Taking a look at Earnings per Share, Zayo Group Holdings, Inc. tends to be beating the analyst estimates more than Home Depot, Inc. (The). so ZAYO is more profitable than HD.
Technical Analysis of Zayo Group Holdings, Inc. & Home Depot, Inc. (The)
Moving average convergence divergence (MACD) shows that Zayo Group Holdings, Inc. (NYSE:ZAYO) is on a PRICE RELATIVITY trend While Home Depot, Inc. (The) (NYSE:HD) is on PRICE RELATIVITY trend. The trend for the past 10-days shows that the Zayo Group Holdings, Inc. was in BEARISH territory and Home Depot, Inc. (The) was in BEARISH territory.
ZAYO’s current statistics gauge that the stock candle is BEARISH with HIGH volatility. While HD’s candle is BEARISH with HIGH.
EPS Growth Rate: ZAYO’s 22.67% versus HD’s 14.85%
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 Zayo Group Holdings, Inc. (NYSE:ZAYO) is predicted at 22.67% while Home Depot, Inc. (The) (NYSE:HD) stands at 14.85%. These numbers suggest that ZAYO 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 ZAYO stands at 1 while HD is at 1.1 whereas the debt ratio of the prior is 3.91 while the debt ratio of the later is 12.69.
The values of the both ratios suggest that HD 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 1.8 for ZAYO and 1.9 for HD which means ZAYO has Buy rating whereas HD has Buy 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 ZAYO is $42.47 which is 27.17% of its current price while HD has price target of 215.47 which is 11.94% 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.
ZAYO currently has price to earning P/E ratio of 60.77 whereas HD has 21.46 while the forward P/E ratio for the prior stands at 49.81 and for the later it depicts the value of 18.44.
The price to Book P/B for ZAYO is 5.14, Price to Sale is at 3.01 and for HD these ratios stand at 107.81 and 2.11.