The shares of VALE S.A. (NYSE:VALE) and Exxon Mobil Corporation (NYSE:XOM) were among the active stocks of the last trading sessions. VALE S.A. (NYSE:VALE) soared to 0.67% closing at the price of $14.95 whereas the shares of Exxon Mobil Corporation (NYSE:XOM) declined -3.45% with the decrease of -2.92 points closing at the price of $81.6. VALE S.A. has currently increase 16.88% in its stock over the period of 6-months while its rival Exxon Mobil Corporation added 4.83% 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 VALE S.A. (NYSE:VALE) is 13.7% while the ROI of Exxon Mobil Corporation (NYSE:XOM) is 3.2%. Another figure that is to be considered while analyzing the profitability of a share is its EBITDA margin, VALE’s EBITDA Margin is 6.91 whereas XOM’s is 11.
Both the profitability ratios suggest a mixed sentiment for VALE S.A. (NYSE:VALE) and Exxon Mobil Corporation (NYSE:XOM).
EPS & Surprise Factor
VALE S.A. (NYSE:VALE) reported $0.01/share EPS for the previous quarter where analysts were predicting an EPS to be $0.26/share Thus lagging the analyst Estimates with a Surprise Factor of -96.2 Percent. While, Exxon Mobil Corporation (NYSE:XOM) reported EPS of $0.92/share in the last quarter. The analysts projected EPS of $1.27/share depicting a Surprise of -27.6 Percent.
Taking a look at Earnings per Share, Exxon Mobil Corporation tends to be beating the analyst estimates more than VALE S.A.. so XOM is more profitable than VALE.
Technical Analysis of VALE S.A. & Exxon Mobil Corporation
Moving average convergence divergence (MACD) shows that VALE S.A. (NYSE:VALE) is on a PRICE RELATIVITY trend While Exxon Mobil Corporation (NYSE:XOM) is on PRICE RELATIVITY trend. The trend for the past 10-days shows that the VALE S.A. was in BEARISH territory and Exxon Mobil Corporation was in BEARISH territory.
VALE’s current statistics gauge that the stock candle is BEARISH with MEDIUM volatility. While XOM’s candle is BEARISH with HIGH.
EPS Growth Rate: VALE’s 17.76% versus XOM’s 22.86%
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 VALE S.A. (NYSE:VALE) is predicted at 17.76% while Exxon Mobil Corporation (NYSE:XOM) stands at 22.86%. These numbers suggest that XOM 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 VALE stands at 1.7 while XOM is at 0.8 whereas the debt ratio of the prior is 0.43 while the debt ratio of the later is 0.22.
The values of the both ratios suggest that VALE 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 2.1 for VALE and 2.8 for XOM which means VALE has Hold rating whereas XOM 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 VALE is $15.9 which is 5.97% of its current price while XOM has price target of 89.64 which is 8.97% 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.
VALE currently has price to earning P/E ratio of 17.4 whereas XOM has 23.21 while the forward P/E ratio for the prior stands at 8.74 and for the later it depicts the value of 14.38.
The price to Book P/B for VALE is 1.86, Price to Sale is at 2.63 and for XOM these ratios stand at 1.86 and 1.37.