The shares of Square, Inc. (NYSE:SQ) and MagneGas Corporation (NASDAQ:MNGA) were among the active stocks of the last trading sessions. Square, Inc. (NYSE:SQ) declined to -10.87% closing at the price of $69.03 whereas the shares of MagneGas Corporation (NASDAQ:MNGA) declined -27.2% with the decrease of -0.1 points closing at the price of $0.27. Square, Inc. has currently increase 45.33% in its stock over the period of 6-months while its rival MagneGas Corporation subtracted -65.87% 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 Square, Inc. (NYSE:SQ) is -4.8% while the ROI of MagneGas Corporation (NASDAQ:MNGA) is -143.9%. Another figure that is to be considered while analyzing the profitability of a share is its EBITDA margin, SQ’s EBITDA Margin is -3028.82 whereas MNGA’s is -1.2.
Both the profitability ratios suggest a mixed sentiment for Square, Inc. (NYSE:SQ) and MagneGas Corporation (NASDAQ:MNGA).
EPS & Surprise Factor
Square, Inc. (NYSE:SQ) reported $0.13/share EPS for the previous quarter where analysts were predicting an EPS to be $0.12/share Thus beating the analyst Estimates with a Surprise Factor of 8.3 Percent. While, MagneGas Corporation (NASDAQ:MNGA) reported EPS of $-0.24/share in the last quarter. The analysts projected EPS of $-0.13/share depicting a Surprise of -84.6 Percent.
Taking a look at Earnings per Share, Square, Inc. tends to be beating the analyst estimates more than MagneGas Corporation. so SQ is more profitable than MNGA.
Technical Analysis of Square, Inc. & MagneGas Corporation
Moving average convergence divergence (MACD) shows that Square, Inc. (NYSE:SQ) is on a PRICE RELATIVITY trend While MagneGas Corporation (NASDAQ:MNGA) is on PRICE RELATIVITY trend. The trend for the past 10-days shows that the Square, Inc. was in BEARISH territory and MagneGas Corporation was in BULLISH territory.
SQ’s current statistics gauge that the stock candle is BEARISH with HIGH volatility. While MNGA’s candle is BULLISH with HIGH.
EPS Growth Rate: SQ’s 54.8% versus MNGA’s 0%
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 Square, Inc. (NYSE:SQ) is predicted at 54.8% while MagneGas Corporation (NASDAQ:MNGA) stands at 0%. These numbers suggest that SQ 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 SQ stands at 2.2 while MNGA is at 1.4 whereas the debt ratio of the prior is 0.99 while the debt ratio of the later is 0.08.
The values of the both ratios suggest that SQ 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 2.6 for SQ and 2 for MNGA which means SQ has Hold rating whereas MNGA 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 SQ is $78.82 which is 12.42% of its current price while MNGA has price target of 6 which is 95.5% 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.
SQ currently has price to earning P/E ratio of 0 whereas MNGA has 0 while the forward P/E ratio for the prior stands at 88.16 and for the later it depicts the value of 0.
The price to Book P/B for SQ is 25.76, Price to Sale is at 10.6 and for MNGA these ratios stand at 0.3 and 1.86.