The shares of UnitedHealth Group Incorporated (NYSE:UNH) and BHP Billiton Limited (NYSE:BHP) were among the active stocks of the last trading sessions. UnitedHealth Group Incorporated (NYSE:UNH) declined to -2.27% closing at the price of $257.12 whereas the shares of BHP Billiton Limited (NYSE:BHP) soared 0.1% with the increase of 0.05 points closing at the price of $47.69. UnitedHealth Group Incorporated has currently increase 14.64% in its stock over the period of 6-months while its rival BHP Billiton Limited added 1.9% 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 UnitedHealth Group Incorporated (NYSE:UNH) is 13.6% while the ROI of BHP Billiton Limited (NYSE:BHP) is 13.7%. Another figure that is to be considered while analyzing the profitability of a share is its EBITDA margin, UNH’s EBITDA Margin is 15.28 whereas BHP’s is 6.7.
Both the profitability ratios suggest a mixed sentiment for UnitedHealth Group Incorporated (NYSE:UNH) and BHP Billiton Limited (NYSE:BHP).
EPS & Surprise Factor
Technical Analysis of UnitedHealth Group Incorporated & BHP Billiton Limited
Moving average convergence divergence (MACD) shows that UnitedHealth Group Incorporated (NYSE:UNH) is on a PRICE RELATIVITY trend While BHP Billiton Limited (NYSE:BHP) is on PRICE RELATIVITY trend. The trend for the past 10-days shows that the UnitedHealth Group Incorporated was in BEARISH territory and BHP Billiton Limited was in BEARISH territory.
UNH’s current statistics gauge that the stock candle is BEARISH with HIGH volatility. While BHP’s candle is BULLISH with MEDIUM.
EPS Growth Rate: UNH’s 15.37% versus BHP’s 5.3%
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 UnitedHealth Group Incorporated (NYSE:UNH) is predicted at 15.37% while BHP Billiton Limited (NYSE:BHP) stands at 5.3%. These numbers suggest that UNH 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 UNH stands at 0 while BHP is at 2.5 whereas the debt ratio of the prior is 0.73 while the debt ratio of the later is 0.48.
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 1.6 for UNH and 2.5 for BHP which means UNH has Buy rating whereas BHP 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 UNH is $292.33 which is 12.04% of its current price while BHP has price target of 46.03 which is -3.61% 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.
UNH currently has price to earning P/E ratio of 23.81 whereas BHP has 14.23 while the forward P/E ratio for the prior stands at 17.85 and for the later it depicts the value of 18.61.
The price to Book P/B for UNH is 5.12, Price to Sale is at 1.15 and for BHP these ratios stand at 2.28 and 2.91.