The shares of Toll Brothers, Inc. (NYSE:TOL) and Office Depot, Inc. (NASDAQ:ODP) were among the active stocks of the last trading sessions. Toll Brothers, Inc. (NYSE:TOL) declined to -0.22% closing at the price of $31.35 whereas the shares of Office Depot, Inc. (NASDAQ:ODP) declined -1.74% with the decrease of -0.05 points closing at the price of $2.83. Toll Brothers, Inc. has currently decrease -25.97% in its stock over the period of 6-months while its rival Office Depot, Inc. added 39.41% 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 Toll Brothers, Inc. (NYSE:TOL) is 4.7% while the ROI of Office Depot, Inc. (NASDAQ:ODP) is 3.1%. Another figure that is to be considered while analyzing the profitability of a share is its EBITDA margin, TOL’s EBITDA Margin is 9.95 whereas ODP’s is 5.22.
Both the profitability ratios suggest that Toll Brothers, Inc. (NYSE:TOL) is more suitable investment in terms of profitability and return.
EPS & Surprise Factor
Toll Brothers, Inc. (NYSE:TOL) reported $1.26/share EPS for the previous quarter where analysts were predicting an EPS to be $1.03/share Thus beating the analyst Estimates with a Surprise Factor of 22.3 Percent. While, Office Depot, Inc. (NASDAQ:ODP) reported EPS of $0.05/share in the last quarter. The analysts projected EPS of $0.04/share depicting a Surprise of 25 Percent.
Taking a look at Earnings per Share, Office Depot, Inc. tends to be beating the analyst estimates more than Toll Brothers, Inc.. so ODP is more profitable than TOL.
Technical Analysis of Toll Brothers, Inc. & Office Depot, Inc.
Moving average convergence divergence (MACD) shows that Toll Brothers, Inc. (NYSE:TOL) is on a PRICE RELATIVITY trend While Office Depot, Inc. (NASDAQ:ODP) is on PRICE RELATIVITY trend. The trend for the past 10-days shows that the Toll Brothers, Inc. was in BEARISH territory and Office Depot, Inc. was in BEARISH territory.
TOL’s current statistics gauge that the stock candle is BEARISH with MEDIUM volatility. While ODP’s candle is BEARISH with MEDIUM.
EPS Growth Rate: TOL’s 20.05% versus ODP’s -2.2%
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 Toll Brothers, Inc. (NYSE:TOL) is predicted at 20.05% while Office Depot, Inc. (NASDAQ:ODP) stands at -2.2%. These numbers suggest that TOL 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 TOL stands at 0 while ODP is at 1.4 whereas the debt ratio of the prior is 0.8 while the debt ratio of the later is 0.82.
The values of the both ratios suggest that ODP 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 2.4 for TOL and 3 for ODP which means TOL has Hold rating whereas ODP 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 TOL is $47.27 which is 33.68% of its current price while ODP has price target of 3.13 which is 9.58% 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.
TOL currently has price to earning P/E ratio of 8.35 whereas ODP has 47.97 while the forward P/E ratio for the prior stands at 6.1 and for the later it depicts the value of 7.57.
The price to Book P/B for TOL is 1.05, Price to Sale is at 0.69 and for ODP these ratios stand at 0.73 and 0.15.