The shares of USG Corporation (NYSE:USG) and Continental Resources, Inc. (NYSE:CLR) were among the active stocks of the last trading sessions. USG Corporation (NYSE:USG) declined to -0.42% closing at the price of $42.72 whereas the shares of Continental Resources, Inc. (NYSE:CLR) declined -2.97% with the decrease of -1.81 points closing at the price of $59.12. USG Corporation has currently increase 7.67% in its stock over the period of 6-months while its rival Continental Resources, Inc. subtracted -7.38% 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 USG Corporation (NYSE:USG) is 8.6% while the ROI of Continental Resources, Inc. (NYSE:CLR) is 3.2%. Another figure that is to be considered while analyzing the profitability of a share is its EBITDA margin, USG’s EBITDA Margin is 14.32 whereas CLR’s is 9.28.
Both the profitability ratios suggest that USG Corporation (NYSE:USG) is more suitable investment in terms of profitability and return.
EPS & Surprise Factor
USG Corporation (NYSE:USG) reported $0.5/share EPS for the previous quarter where analysts were predicting an EPS to be $0.61/share Thus lagging the analyst Estimates with a Surprise Factor of -18 Percent. While, Continental Resources, Inc. (NYSE:CLR) reported EPS of $0.73/share in the last quarter. The analysts projected EPS of $0.71/share depicting a Surprise of 2.8 Percent.
Taking a look at Earnings per Share, Continental Resources, Inc. tends to be beating the analyst estimates more than USG Corporation. so CLR is more profitable than USG.
Technical Analysis of USG Corporation & Continental Resources, Inc.
Moving average convergence divergence (MACD) shows that USG Corporation (NYSE:USG) is on a PRICE RELATIVITY trend While Continental Resources, Inc. (NYSE:CLR) is on PRICE RELATIVITY trend. The trend for the past 10-days shows that the USG Corporation was in BEARISH territory and Continental Resources, Inc. was in BEARISH territory.
USG’s current statistics gauge that the stock candle is BEARISH with MEDIUM volatility. While CLR’s candle is BEARISH with HIGH.
EPS Growth Rate: USG’s 16.9% versus CLR’s 0%
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 USG Corporation (NYSE:USG) is predicted at 16.9% while Continental Resources, Inc. (NYSE:CLR) stands at 0%. These numbers suggest that USG 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 USG stands at 2.3 while CLR is at 1 whereas the debt ratio of the prior is 0 while the debt ratio of the later is 1.1.
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 2.9 for USG and 2.1 for CLR which means USG has Hold rating whereas CLR 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 USG is $41.64 which is -2.59% of its current price while CLR has price target of 75.82 which is 22.03% 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.
USG currently has price to earning P/E ratio of 25.99 whereas CLR has 36.11 while the forward P/E ratio for the prior stands at 17.14 and for the later it depicts the value of 15.04.
The price to Book P/B for USG is 3.2, Price to Sale is at 1.81 and for CLR these ratios stand at 3.92 and 5.36.