The shares of Companhia de saneamento Basico Do Estado De Sao Paulo – Sabesp (NYSE:SBS) and Gogo Inc. (NASDAQ:GOGO) were among the active stocks of the last trading sessions. Companhia de saneamento Basico Do Estado De Sao Paulo – Sabesp (NYSE:SBS) declined to -3.69% closing at the price of $7.3 whereas the shares of Gogo Inc. (NASDAQ:GOGO) declined -2.9% with the decrease of -0.18 points closing at the price of $6.02. Companhia de saneamento Basico Do Estado De Sao Paulo – Sabesp has currently decrease -25.17% in its stock over the period of 6-months while its rival Gogo Inc. subtracted -33.63% 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 Companhia de saneamento Basico Do Estado De Sao Paulo – Sabesp (NYSE:SBS) is 10.1% while the ROI of Gogo Inc. (NASDAQ:GOGO) is -7.3%. Another figure that is to be considered while analyzing the profitability of a share is its EBITDA margin, SBS’s EBITDA Margin is 5.4 whereas GOGO’s is 11.69.
Both the profitability ratios suggest a mixed sentiment for Companhia de saneamento Basico Do Estado De Sao Paulo – Sabesp (NYSE:SBS) and Gogo Inc. (NASDAQ:GOGO).
EPS & Surprise Factor
Companhia de saneamento Basico Do Estado De Sao Paulo – Sabesp (NYSE:SBS) reported $0.07/share EPS for the previous quarter where analysts were predicting an EPS to be $0.1/share Thus lagging the analyst Estimates with a Surprise Factor of -30 Percent. While, Gogo Inc. (NASDAQ:GOGO) reported EPS of $-0.47/share in the last quarter. The analysts projected EPS of $-0.75/share depicting a Surprise of 37.3 Percent.
Taking a look at Earnings per Share, Gogo Inc. tends to be beating the analyst estimates more than Companhia de saneamento Basico Do Estado De Sao Paulo – Sabesp. so GOGO is more profitable than SBS.
Technical Analysis of Companhia de saneamento Basico Do Estado De Sao Paulo – Sabesp & Gogo Inc.
Moving average convergence divergence (MACD) shows that Companhia de saneamento Basico Do Estado De Sao Paulo – Sabesp (NYSE:SBS) is on a PRICE RELATIVITY trend While Gogo Inc. (NASDAQ:GOGO) is on PRICE RELATIVITY trend. The trend for the past 10-days shows that the Companhia de saneamento Basico Do Estado De Sao Paulo – Sabesp was in BULLISH territory and Gogo Inc. was in BULLISH territory.
SBS’s current statistics gauge that the stock candle is BEARISH with LOW volatility. While GOGO’s candle is BEARISH with HIGH.
EPS Growth Rate: SBS’s 10.71% versus GOGO’s 10%
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 Companhia de saneamento Basico Do Estado De Sao Paulo – Sabesp (NYSE:SBS) is predicted at 10.71% while Gogo Inc. (NASDAQ:GOGO) stands at 10%. These numbers suggest that SBS 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 SBS stands at 1.2 while GOGO is at 2 whereas the debt ratio of the prior is 0.72 while the debt ratio of the later is 0.
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 2.7 for SBS and 3.3 for GOGO which means SBS has Hold rating whereas GOGO has Sell 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 SBS is $8.23 which is 11.3% of its current price while GOGO has price target of 6.83 which is 11.86% 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.
SBS currently has price to earning P/E ratio of 8.3 whereas GOGO has 0 while the forward P/E ratio for the prior stands at 1.66 and for the later it depicts the value of 0.
The price to Book P/B for SBS is 1.04, Price to Sale is at 1.24 and for GOGO these ratios stand at 0 and 0.63.