The shares of Vertex Pharmaceuticals Incorporated (NASDAQ:VRTX) and Forum Energy Technologies, Inc. (NYSE:FET) were among the active stocks of the last trading sessions. Vertex Pharmaceuticals Incorporated (NASDAQ:VRTX) declined to -3.55% closing at the price of $178.9 whereas the shares of Forum Energy Technologies, Inc. (NYSE:FET) declined -6.92% with the decrease of -0.69 points closing at the price of $9.28. Vertex Pharmaceuticals Incorporated has currently increase 13.12% in its stock over the period of 6-months while its rival Forum Energy Technologies, Inc. subtracted -22.99% 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 Vertex Pharmaceuticals Incorporated (NASDAQ:VRTX) is 8.8% while the ROI of Forum Energy Technologies, Inc. (NYSE:FET) is -0.8%. Another figure that is to be considered while analyzing the profitability of a share is its EBITDA margin, VRTX’s EBITDA Margin is 77.55 whereas FET’s is 39.91.
Both the profitability ratios suggest that Vertex Pharmaceuticals Incorporated (NASDAQ:VRTX) is more suitable investment in terms of profitability and return.
EPS & Surprise Factor
Vertex Pharmaceuticals Incorporated (NASDAQ:VRTX) reported $0.94/share EPS for the previous quarter where analysts were predicting an EPS to be $0.75/share Thus beating the analyst Estimates with a Surprise Factor of 25.3 Percent. While, Forum Energy Technologies, Inc. (NYSE:FET) reported EPS of $-0.01/share in the last quarter. The analysts projected EPS of $-0.01/share depicting a Surprise of 0 Percent.
Taking a look at Earnings per Share, Vertex Pharmaceuticals Incorporated tends to be beating the analyst estimates more than Forum Energy Technologies, Inc.. so VRTX is more profitable than FET.
Technical Analysis of Vertex Pharmaceuticals Incorporated & Forum Energy Technologies, Inc.
Moving average convergence divergence (MACD) shows that Vertex Pharmaceuticals Incorporated (NASDAQ:VRTX) is on a PRICE RELATIVITY trend While Forum Energy Technologies, Inc. (NYSE:FET) is on PRICE RELATIVITY trend. The trend for the past 10-days shows that the Vertex Pharmaceuticals Incorporated was in BEARISH territory and Forum Energy Technologies, Inc. was in BEARISH territory.
VRTX’s current statistics gauge that the stock candle is BEARISH with HIGH volatility. While FET’s candle is BEARISH with HIGH.
EPS Growth Rate: VRTX’s 51.63% versus FET’s 40%
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 Vertex Pharmaceuticals Incorporated (NASDAQ:VRTX) is predicted at 51.63% while Forum Energy Technologies, Inc. (NYSE:FET) stands at 40%. These numbers suggest that VRTX 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 VRTX stands at 3.7 while FET is at 3.3 whereas the debt ratio of the prior is 0.22 while the debt ratio of the later is 0.33.
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 1.8 for VRTX and 2.3 for FET which means VRTX has Buy rating whereas FET 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 VRTX is $198.27 which is 9.77% of its current price while FET has price target of 13.27 which is 30.07% 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.
VRTX currently has price to earning P/E ratio of 112.09 whereas FET has 25.08 while the forward P/E ratio for the prior stands at 38.52 and for the later it depicts the value of 30.73.
The price to Book P/B for VRTX is 16.93, Price to Sale is at 16.89 and for FET these ratios stand at 0.71 and 1.01.