The shares of Twitter, Inc. (NYSE:TWTR) and Applied Materials, Inc. (NASDAQ:AMAT) were among the active stocks of the last trading sessions. Twitter, Inc. (NYSE:TWTR) soared to 0.78% closing at the price of $27 whereas the shares of Applied Materials, Inc. (NASDAQ:AMAT) declined -4.76% with the decrease of -1.64 points closing at the price of $32.79. Twitter, Inc. has currently decrease -6.12% in its stock over the period of 6-months while its rival Applied Materials, Inc. subtracted -41.52% 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 Twitter, Inc. (NYSE:TWTR) is 4.6% while the ROI of Applied Materials, Inc. (NASDAQ:AMAT) is 24.4%. Another figure that is to be considered while analyzing the profitability of a share is its EBITDA margin, TWTR’s EBITDA Margin is 31.47 whereas AMAT’s is 7.13.
Both the profitability ratios suggest a mixed sentiment for Twitter, Inc. (NYSE:TWTR) and Applied Materials, Inc. (NASDAQ:AMAT).
EPS & Surprise Factor
Twitter, Inc. (NYSE:TWTR) reported $0.17/share EPS for the previous quarter where analysts were predicting an EPS to be $0.17/share Thus meeting the analyst Estimates with a Surprise Factor of 0 Percent. While, Applied Materials, Inc. (NASDAQ:AMAT) reported EPS of $1.2/share in the last quarter. The analysts projected EPS of $1.17/share depicting a Surprise of 2.6 Percent.
Taking a look at Earnings per Share, Applied Materials, Inc. tends to be beating the analyst estimates more than Twitter, Inc.. so AMAT is more profitable than TWTR.
Technical Analysis of Twitter, Inc. & Applied Materials, Inc.
Moving average convergence divergence (MACD) shows that Twitter, Inc. (NYSE:TWTR) is on a PRICE RELATIVITY trend While Applied Materials, Inc. (NASDAQ:AMAT) is on PRICE RELATIVITY trend. The trend for the past 10-days shows that the Twitter, Inc. was in BEARISH territory and Applied Materials, Inc. was in BEARISH territory.
TWTR’s current statistics gauge that the stock candle is BULLISH with HIGH volatility. While AMAT’s candle is BEARISH with HIGH.
EPS Growth Rate: TWTR’s 32.4% versus AMAT’s 16.72%
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 Twitter, Inc. (NYSE:TWTR) is predicted at 32.4% while Applied Materials, Inc. (NASDAQ:AMAT) stands at 16.72%. These numbers suggest that TWTR 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 TWTR stands at 11 while AMAT is at 2.5 whereas the debt ratio of the prior is 0.48 while the debt ratio of the later is 0.
The values of the both ratios suggest that TWTR 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 3 for TWTR and 2 for AMAT which means TWTR has Hold rating whereas AMAT 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 TWTR is $33.41 which is 19.19% of its current price while AMAT has price target of 59.19 which is 44.6% 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.
TWTR currently has price to earning P/E ratio of 34.66 whereas AMAT has 7.6 while the forward P/E ratio for the prior stands at 34.31 and for the later it depicts the value of 7.71.
The price to Book P/B for TWTR is 3.65, Price to Sale is at 7.55 and for AMAT these ratios stand at 4.77 and 1.91.