The shares of Gilead Sciences, Inc. (NASDAQ:GILD) and Weyerhaeuser Company (NYSE:WY) were among the active stocks of the last trading sessions. Gilead Sciences, Inc. (NASDAQ:GILD) declined to -3.05% closing at the price of $72.5 whereas the shares of Weyerhaeuser Company (NYSE:WY) declined -2.06% with the decrease of -0.6 points closing at the price of $28.5. Gilead Sciences, Inc. has currently decrease -3.62% in its stock over the period of 6-months while its rival Weyerhaeuser Company subtracted -21.25% 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 Gilead Sciences, Inc. (NASDAQ:GILD) is 19.9% while the ROI of Weyerhaeuser Company (NYSE:WY) is 6.8%. Another figure that is to be considered while analyzing the profitability of a share is its EBITDA margin, GILD’s EBITDA Margin is 8.25 whereas WY’s is 13.32.
Both the profitability ratios suggest a mixed sentiment for Gilead Sciences, Inc. (NASDAQ:GILD) and Weyerhaeuser Company (NYSE:WY).
EPS & Surprise Factor
Gilead Sciences, Inc. (NASDAQ:GILD) reported $1.91/share EPS for the previous quarter where analysts were predicting an EPS to be $1.56/share Thus beating the analyst Estimates with a Surprise Factor of 22.4 Percent. While, Weyerhaeuser Company (NYSE:WY) reported EPS of $0.44/share in the last quarter. The analysts projected EPS of $0.43/share depicting a Surprise of 2.3 Percent.
Taking a look at Earnings per Share, Gilead Sciences, Inc. tends to be beating the analyst estimates more than Weyerhaeuser Company. so GILD is more profitable than WY.
Technical Analysis of Gilead Sciences, Inc. & Weyerhaeuser Company
Moving average convergence divergence (MACD) shows that Gilead Sciences, Inc. (NASDAQ:GILD) is on a PRICE RELATIVITY trend While Weyerhaeuser Company (NYSE:WY) is on PRICE RELATIVITY trend. The trend for the past 10-days shows that the Gilead Sciences, Inc. was in BEARISH territory and Weyerhaeuser Company was in BEARISH territory.
GILD’s current statistics gauge that the stock candle is BEARISH with HIGH volatility. While WY’s candle is BEARISH with HIGH.
EPS Growth Rate: GILD’s -5.41% versus WY’s 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 Gilead Sciences, Inc. (NASDAQ:GILD) is predicted at -5.41% while Weyerhaeuser Company (NYSE:WY) stands at 5%. These numbers suggest that WY 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 GILD stands at 3 while WY is at 2.2 whereas the debt ratio of the prior is 1.34 while the debt ratio of the later is 0.69.
The values of the both ratios suggest that GILD 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 2.1 for GILD and 2.2 for WY which means GILD has Hold rating whereas WY 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 GILD is $87.91 which is 17.53% of its current price while WY has price target of 37.45 which is 23.9% 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.
GILD currently has price to earning P/E ratio of 12.39 whereas WY has 20.82 while the forward P/E ratio for the prior stands at 11.01 and for the later it depicts the value of 18.75.
The price to Book P/B for GILD is 4.34, Price to Sale is at 4.07 and for WY these ratios stand at 2.33 and 2.88.