The shares of Western Digital Corporation (NASDAQ:WDC) and ServiceMaster Global Holdings, Inc. (NYSE:SERV) were among the active stocks of the last trading sessions. Western Digital Corporation (NASDAQ:WDC) declined to -0.04% closing at the price of $54.13 whereas the shares of ServiceMaster Global Holdings, Inc. (NYSE:SERV) declined -1.75% with the decrease of -0.77 points closing at the price of $43.28. Western Digital Corporation has currently decrease -39.81% in its stock over the period of 6-months while its rival ServiceMaster Global Holdings, Inc. added 27.27% 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 Western Digital Corporation (NASDAQ:WDC) is 16.4% while the ROI of ServiceMaster Global Holdings, Inc. (NYSE:SERV) is 9.8%. Another figure that is to be considered while analyzing the profitability of a share is its EBITDA margin, WDC’s EBITDA Margin is 3.82 whereas SERV’s is 12.16.
Both the profitability ratios suggest a mixed sentiment for Western Digital Corporation (NASDAQ:WDC) and ServiceMaster Global Holdings, Inc. (NYSE:SERV).
EPS & Surprise Factor
Western Digital Corporation (NASDAQ:WDC) reported $3.61/share EPS for the previous quarter where analysts were predicting an EPS to be $3.49/share Thus beating the analyst Estimates with a Surprise Factor of 3.4 Percent. While, ServiceMaster Global Holdings, Inc. (NYSE:SERV) reported EPS of $0.79/share in the last quarter. The analysts projected EPS of $0.8/share depicting a Surprise of -1.3 Percent.
Taking a look at Earnings per Share, Western Digital Corporation tends to be beating the analyst estimates more than ServiceMaster Global Holdings, Inc.. so WDC is more profitable than SERV.
Technical Analysis of Western Digital Corporation & ServiceMaster Global Holdings, Inc.
Moving average convergence divergence (MACD) shows that Western Digital Corporation (NASDAQ:WDC) is on a PRICE RELATIVITY trend While ServiceMaster Global Holdings, Inc. (NYSE:SERV) is on PRICE RELATIVITY trend. The trend for the past 10-days shows that the Western Digital Corporation was in BEARISH territory and ServiceMaster Global Holdings, Inc. was in BULLISH territory.
WDC’s current statistics gauge that the stock candle is BEARISH with HIGH volatility. While SERV’s candle is BEARISH with HIGH.
EPS Growth Rate: WDC’s 5.63% versus SERV’s 10.3%
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 Western Digital Corporation (NASDAQ:WDC) is predicted at 5.63% while ServiceMaster Global Holdings, Inc. (NYSE:SERV) stands at 10.3%. These numbers suggest that SERV 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 WDC stands at 2.4 while SERV is at 1 whereas the debt ratio of the prior is 0.97 while the debt ratio of the later is 2.03.
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 2.2 for WDC and 1.8 for SERV which means WDC has Hold rating whereas SERV 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 WDC is $97.26 which is 44.35% of its current price while SERV has price target of 49.67 which is 12.86% 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.
WDC currently has price to earning P/E ratio of 7.75 whereas SERV has 23.18 while the forward P/E ratio for the prior stands at 4.61 and for the later it depicts the value of 27.41.
The price to Book P/B for WDC is 1.41, Price to Sale is at 0.77 and for SERV these ratios stand at 4.35 and 1.95.