The shares of CenterPoint Energy, Inc. (NYSE:CNP) and Melco Resorts & Entertainment Limited (NASDAQ:MLCO) were among the active stocks of the last trading sessions. CenterPoint Energy, Inc. (NYSE:CNP) declined to -2.62% closing at the price of $27.15 whereas the shares of Melco Resorts & Entertainment Limited (NASDAQ:MLCO) soared 0.11% with the increase of 0.02 points closing at the price of $18.2. CenterPoint Energy, Inc. has currently increase 1.8% in its stock over the period of 6-months while its rival Melco Resorts & Entertainment Limited subtracted -41.08% 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 CenterPoint Energy, Inc. (NYSE:CNP) is 4.8% while the ROI of Melco Resorts & Entertainment Limited (NASDAQ:MLCO) is 8.2%. Another figure that is to be considered while analyzing the profitability of a share is its EBITDA margin, CNP’s EBITDA Margin is 8.74 whereas MLCO’s is 10.23.
Both the profitability ratios suggest that Melco Resorts & Entertainment Limited (NASDAQ:MLCO) is more suitable investment in terms of profitability and return.
EPS & Surprise Factor
CenterPoint Energy, Inc. (NYSE:CNP) reported $0.3/share EPS for the previous quarter where analysts were predicting an EPS to be $0.32/share Thus lagging the analyst Estimates with a Surprise Factor of -6.3 Percent. While, Melco Resorts & Entertainment Limited (NASDAQ:MLCO) reported EPS of $0.12/share in the last quarter. The analysts projected EPS of $0.27/share depicting a Surprise of -55.6 Percent.
Taking a look at Earnings per Share, CenterPoint Energy, Inc. tends to be beating the analyst estimates more than Melco Resorts & Entertainment Limited. so CNP is more profitable than MLCO.
Technical Analysis of CenterPoint Energy, Inc. & Melco Resorts & Entertainment Limited
Moving average convergence divergence (MACD) shows that CenterPoint Energy, Inc. (NYSE:CNP) is on a PRICE RELATIVITY trend While Melco Resorts & Entertainment Limited (NASDAQ:MLCO) is on PRICE RELATIVITY trend. The trend for the past 10-days shows that the CenterPoint Energy, Inc. was in BULLISH territory and Melco Resorts & Entertainment Limited was in BEARISH territory.
CNP’s current statistics gauge that the stock candle is BEARISH with HIGH volatility. While MLCO’s candle is BULLISH with HIGH.
EPS Growth Rate: CNP’s 8.92% versus MLCO’s 12%
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 CenterPoint Energy, Inc. (NYSE:CNP) is predicted at 8.92% while Melco Resorts & Entertainment Limited (NASDAQ:MLCO) stands at 12%. These numbers suggest that MLCO 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 CNP stands at 1 while MLCO is at 1 whereas the debt ratio of the prior is 1.91 while the debt ratio of the later is 1.28.
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 2.6 for CNP and 1.6 for MLCO which means CNP has Hold rating whereas MLCO 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 CNP is $29.38 which is 7.59% of its current price while MLCO has price target of 32.55 which is 44.09% 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.
CNP currently has price to earning P/E ratio of 26.67 whereas MLCO has 21.88 while the forward P/E ratio for the prior stands at 16.08 and for the later it depicts the value of 13.06.
The price to Book P/B for CNP is 2.51, Price to Sale is at 1.16 and for MLCO these ratios stand at 3.01 and 1.83.