Which Stock will you hold for a while? Centennial Resource Development, Inc. (CDEV) or Nuance Communications, Inc. (NUAN)

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The shares of Centennial Resource Development, Inc. (NASDAQ:CDEV) and Nuance Communications, Inc. (NASDAQ:NUAN) were among the active stocks of the last trading sessions. Centennial Resource Development, Inc. (NASDAQ:CDEV) declined to -2.63% closing at the price of $20.7 whereas the shares of Nuance Communications, Inc. (NASDAQ:NUAN) declined -2.18% with the decrease of -0.37 points closing at the price of $16.63. Centennial Resource Development, Inc. has currently increase 19.24% in its stock over the period of 6-months while its rival Nuance Communications, Inc. added 11.76% 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 Centennial Resource Development, Inc. (NASDAQ:CDEV) is 2.2% while the ROI of Nuance Communications, Inc. (NASDAQ:NUAN) is 0.4%. Another figure that is to be considered while analyzing the profitability of a share is its EBITDA margin, CDEV’s EBITDA Margin is 11.59 whereas NUAN’s is 23.4.

Both the profitability ratios suggest a mixed sentiment for Centennial Resource Development, Inc. (NASDAQ:CDEV) and Nuance Communications, Inc. (NASDAQ:NUAN).

EPS & Surprise Factor

Centennial Resource Development, Inc. (NASDAQ:CDEV) reported $0.25/share EPS for the previous quarter where analysts were predicting an EPS to be $0.21/share Thus beating the analyst Estimates with a Surprise Factor of 19 Percent. While, Nuance Communications, Inc. (NASDAQ:NUAN) reported EPS of $0.27/share in the last quarter. The analysts projected EPS of $0.27/share depicting a Surprise of 0 Percent.

Taking a look at Earnings per Share, Centennial Resource Development, Inc. tends to be beating the analyst estimates more than Nuance Communications, Inc.. so CDEV is more profitable than NUAN.

Technical Analysis of Centennial Resource Development, Inc. & Nuance Communications, Inc.

Moving average convergence divergence (MACD) shows that Centennial Resource Development, Inc. (NASDAQ:CDEV) is on a PRICE RELATIVITY trend While Nuance Communications, Inc. (NASDAQ:NUAN) is on PRICE RELATIVITY trend. The trend for the past 10-days shows that the Centennial Resource Development, Inc. was in BEARISH territory and Nuance Communications, Inc. was in BEARISH territory.

CDEV’s current statistics gauge that the stock candle is BEARISH with HIGH volatility. While NUAN’s candle is BEARISH with MEDIUM.

EPS Growth Rate: CDEV’s 61.35% versus NUAN’s 7.9%

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 Centennial Resource Development, Inc. (NASDAQ:CDEV) is predicted at 61.35% while Nuance Communications, Inc. (NASDAQ:NUAN) stands at 7.9%. These numbers suggest that CDEV 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 CDEV stands at 0.9 while NUAN is at 1.3 whereas the debt ratio of the prior is 0 while the debt ratio of the later is 1.32.

The values of the both ratios suggest that NUAN 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 1.7 for CDEV and 2 for NUAN which means CDEV has Buy rating whereas NUAN 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 CDEV is $26.5 which is 21.89% of its current price while NUAN has price target of 18.75 which is 11.31% 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.

CDEV currently has price to earning P/E ratio of 31.75 whereas NUAN has 0 while the forward P/E ratio for the prior stands at 16.47 and for the later it depicts the value of 13.59.

The price to Book P/B for CDEV is 1.81, Price to Sale is at 8.08 and for NUAN these ratios stand at 2.77 and 2.42.