The shares of Abercrombie & Fitch Company (NYSE:ANF) and State Street Corporation (NYSE:STT) were among the active stocks of the last trading sessions. Abercrombie & Fitch Company (NYSE:ANF) declined to -5.47% closing at the price of $17.99 whereas the shares of State Street Corporation (NYSE:STT) declined -1.38% with the decrease of -1.14 points closing at the price of $81.73. Abercrombie & Fitch Company has currently decrease -36.97% in its stock over the period of 6-months while its rival State Street Corporation subtracted -18.11% 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 Abercrombie & Fitch Company (NYSE:ANF) is 3.2% while the ROI of State Street Corporation (NYSE:STT) is 5.2%. Another figure that is to be considered while analyzing the profitability of a share is its EBITDA margin, ANF’s EBITDA Margin is 3.14 whereas STT’s is NOT AVAILABLE.
Both the profitability ratios suggest that State Street Corporation (NYSE:STT) is more suitable investment in terms of profitability and return.
EPS & Surprise Factor
Abercrombie & Fitch Company (NYSE:ANF) reported $0.06/share EPS for the previous quarter where analysts were predicting an EPS to be $-0.04/share Thus beating the analyst Estimates with a Surprise Factor of 250 Percent. While, State Street Corporation (NYSE:STT) reported EPS of $2.05/share in the last quarter. The analysts projected EPS of $2.01/share depicting a Surprise of 2 Percent.
Taking a look at Earnings per Share, Abercrombie & Fitch Company tends to be beating the analyst estimates more than State Street Corporation. so ANF is more profitable than STT.
Technical Analysis of Abercrombie & Fitch Company & State Street Corporation
Moving average convergence divergence (MACD) shows that Abercrombie & Fitch Company (NYSE:ANF) is on a PRICE RELATIVITY trend While State Street Corporation (NYSE:STT) is on PRICE RELATIVITY trend. The trend for the past 10-days shows that the Abercrombie & Fitch Company was in BEARISH territory and State Street Corporation was in BEARISH territory.
ANF’s current statistics gauge that the stock candle is BEARISH with HIGH volatility. While STT’s candle is BEARISH with HIGH.
EPS Growth Rate: ANF’s 18% versus STT’s 11.48%
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 Abercrombie & Fitch Company (NYSE:ANF) is predicted at 18% while State Street Corporation (NYSE:STT) stands at 11.48%. These numbers suggest that ANF 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 ANF stands at 2.2 while STT is at 0 whereas the debt ratio of the prior is 0 while the debt ratio of the later is 0.75.
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 3.1 for ANF and 2.3 for STT which means ANF has Sell rating whereas STT 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 ANF is $22.83 which is 21.2% of its current price while STT has price target of 103.31 which is 20.89% 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.
ANF currently has price to earning P/E ratio of 21.86 whereas STT has 12.12 while the forward P/E ratio for the prior stands at 18.38 and for the later it depicts the value of 10.
The price to Book P/B for ANF is 1.08, Price to Sale is at 0.33 and for STT these ratios stand at 1.54 and 9.37.