The shares of American Eagle Outfitters, Inc. (NYSE:AEO) and T-Mobile US, Inc. (NASDAQ:TMUS) were among the active stocks of the last trading sessions. American Eagle Outfitters, Inc. (NYSE:AEO) declined to -2.12% closing at the price of $20.77 whereas the shares of T-Mobile US, Inc. (NASDAQ:TMUS) declined -0.63% with the decrease of -0.42 points closing at the price of $66.21. American Eagle Outfitters, Inc. has currently decrease -4.59% in its stock over the period of 6-months while its rival T-Mobile US, Inc. added 6.88% 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 American Eagle Outfitters, Inc. (NYSE:AEO) is 16% while the ROI of T-Mobile US, Inc. (NASDAQ:TMUS) is 7.6%. Another figure that is to be considered while analyzing the profitability of a share is its EBITDA margin, AEO’s EBITDA Margin is 6.53 whereas TMUS’s is 7.97.
Both the profitability ratios suggest a mixed sentiment for American Eagle Outfitters, Inc. (NYSE:AEO) and T-Mobile US, Inc. (NASDAQ:TMUS).
EPS & Surprise Factor
American Eagle Outfitters, Inc. (NYSE:AEO) reported $0.34/share EPS for the previous quarter where analysts were predicting an EPS to be $0.31/share Thus beating the analyst Estimates with a Surprise Factor of 9.7 Percent. While, T-Mobile US, Inc. (NASDAQ:TMUS) reported EPS of $0.92/share in the last quarter. The analysts projected EPS of $0.87/share depicting a Surprise of 5.7 Percent.
Taking a look at Earnings per Share, American Eagle Outfitters, Inc. tends to be beating the analyst estimates more than T-Mobile US, Inc.. so AEO is more profitable than TMUS.
Technical Analysis of American Eagle Outfitters, Inc. & T-Mobile US, Inc.
Moving average convergence divergence (MACD) shows that American Eagle Outfitters, Inc. (NYSE:AEO) is on a PRICE RELATIVITY trend While T-Mobile US, Inc. (NASDAQ:TMUS) is on PRICE RELATIVITY trend. The trend for the past 10-days shows that the American Eagle Outfitters, Inc. was in BEARISH territory and T-Mobile US, Inc. was in BEARISH territory.
AEO’s current statistics gauge that the stock candle is BEARISH with HIGH volatility. While TMUS’s candle is BEARISH with HIGH.
EPS Growth Rate: AEO’s 14.49% versus TMUS’s -4.5%
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 American Eagle Outfitters, Inc. (NYSE:AEO) is predicted at 14.49% while T-Mobile US, Inc. (NASDAQ:TMUS) stands at -4.5%. These numbers suggest that AEO 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 AEO stands at 2 while TMUS is at 0.8 whereas the debt ratio of the prior is 0 while the debt ratio of the later is 1.31.
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 2.6 for AEO and 1.7 for TMUS which means AEO has Hold rating whereas TMUS 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 AEO is $26.27 which is 20.94% of its current price while TMUS has price target of 77.65 which is 14.73% 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.
AEO currently has price to earning P/E ratio of 14.93 whereas TMUS has 22.98 while the forward P/E ratio for the prior stands at 12.78 and for the later it depicts the value of 16.64.
The price to Book P/B for AEO is 2.92, Price to Sale is at 0.92 and for TMUS these ratios stand at 2.4 and 1.35.