Which Stock is more profitable? CME Group Inc. (CME) or Integrated Device Technology, Inc. (IDTI)

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The shares of CME Group Inc. (NASDAQ:CME) and Integrated Device Technology, Inc. (NASDAQ:IDTI) were among the active stocks of the last trading sessions. CME Group Inc. (NASDAQ:CME) declined to -2.34% closing at the price of $176.03 whereas the shares of Integrated Device Technology, Inc. (NASDAQ:IDTI) declined -0.34% with the decrease of -0.16 points closing at the price of $46.51. CME Group Inc. has currently increase 7.72% in its stock over the period of 6-months while its rival Integrated Device Technology, Inc. added 48.17% 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 CME Group Inc. (NASDAQ:CME) is 5.1% while the ROI of Integrated Device Technology, Inc. (NASDAQ:IDTI) is 10.6%. Another figure that is to be considered while analyzing the profitability of a share is its EBITDA margin, CME’s EBITDA Margin is 23.67 whereas IDTI’s is 29.06.

Both the profitability ratios suggest that Integrated Device Technology, Inc. (NASDAQ:IDTI) is more suitable investment in terms of profitability and return.

EPS & Surprise Factor

CME Group Inc. (NASDAQ:CME) reported $1.74/share EPS for the previous quarter where analysts were predicting an EPS to be $1.72/share Thus beating the analyst Estimates with a Surprise Factor of 1.2 Percent. While, Integrated Device Technology, Inc. (NASDAQ:IDTI) reported EPS of $0.44/share in the last quarter. The analysts projected EPS of $0.43/share depicting a Surprise of 2.3 Percent.

Taking a look at Earnings per Share, Integrated Device Technology, Inc. tends to be beating the analyst estimates more than CME Group Inc.. so IDTI is more profitable than CME.

Technical Analysis of CME Group Inc. & Integrated Device Technology, Inc.

Moving average convergence divergence (MACD) shows that CME Group Inc. (NASDAQ:CME) is on a PRICE RELATIVITY trend While Integrated Device Technology, Inc. (NASDAQ:IDTI) is on PRICE RELATIVITY trend. The trend for the past 10-days shows that the CME Group Inc. was in BULLISH territory and Integrated Device Technology, Inc. was in BEARISH territory.

CME’s current statistics gauge that the stock candle is BEARISH with HIGH volatility. While IDTI’s candle is BEARISH with LOW.

EPS Growth Rate: CME’s 14.62% versus IDTI’s 14.4%

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 CME Group Inc. (NASDAQ:CME) is predicted at 14.62% while Integrated Device Technology, Inc. (NASDAQ:IDTI) stands at 14.4%. These numbers suggest that CME 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 CME stands at 1.1 while IDTI is at 5.7 whereas the debt ratio of the prior is 0.15 while the debt ratio of the later is 0.79.

The values of the both ratios suggest that IDTI is more suitable investment when the liquidity and risk is the main concern.

Analyst Recommendations

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 2.3 for CME and 2.7 for IDTI which means CME has Hold rating whereas IDTI 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 CME is $182.36 which is 3.47% of its current price while IDTI has price target of 43.64 which is -6.58% of its current price.

Valuation Ratios

Valuation is the process of determining the company’s worth for an investor, the valuation ratios give an insight to that worthiness.

CME currently has price to earning P/E ratio of 33.08 whereas IDTI has 53.22 while the forward P/E ratio for the prior stands at 24.81 and for the later it depicts the value of 22.17.

The price to Book P/B for CME is 2.58, Price to Sale is at 15.09 and for IDTI these ratios stand at 9.55 and 6.88.