The shares of BHP Billiton plc (NYSE:BBL) and Sogou Inc. (NYSE:SOGO) were among the active stocks of the last trading sessions. BHP Billiton plc (NYSE:BBL) declined to -2.76% closing at the price of $40.49 whereas the shares of Sogou Inc. (NYSE:SOGO) declined -4.41% with the decrease of -0.28 points closing at the price of $6.07. BHP Billiton plc has currently decrease -5.22% in its stock over the period of 6-months while its rival Sogou Inc. subtracted -28.34% 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 BHP Billiton plc (NYSE:BBL) is 13.7% while the ROI of Sogou Inc. (NYSE:SOGO) is 8.7%. Another figure that is to be considered while analyzing the profitability of a share is its EBITDA margin, BBL’s EBITDA Margin is 5.79 whereas SOGO’s is 9.66.
Both the profitability ratios suggest a mixed sentiment for BHP Billiton plc (NYSE:BBL) and Sogou Inc. (NYSE:SOGO).
EPS & Surprise Factor
Technical Analysis of BHP Billiton plc & Sogou Inc.
Moving average convergence divergence (MACD) shows that BHP Billiton plc (NYSE:BBL) is on a PRICE RELATIVITY trend While Sogou Inc. (NYSE:SOGO) is on PRICE RELATIVITY trend. The trend for the past 10-days shows that the BHP Billiton plc was in BEARISH territory and Sogou Inc. was in BEARISH territory.
BBL’s current statistics gauge that the stock candle is BEARISH with MEDIUM volatility. While SOGO’s candle is BEARISH with MEDIUM.
EPS Growth Rate: BBL’s 5.3% versus SOGO’s 35.23%
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 BHP Billiton plc (NYSE:BBL) is predicted at 5.3% while Sogou Inc. (NYSE:SOGO) stands at 35.23%. These numbers suggest that SOGO 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 BBL stands at 2.5 while SOGO is at 2.7 whereas the debt ratio of the prior is 0.48 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 2.5 for BBL and 2.6 for SOGO which means BBL has Hold rating whereas SOGO 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 BBL is $46.2 which is 12.36% of its current price while SOGO has price target of 10.23 which is 40.66% 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.
BBL currently has price to earning P/E ratio of 12.08 whereas SOGO has 28.23 while the forward P/E ratio for the prior stands at 15.87 and for the later it depicts the value of 14.45.
The price to Book P/B for BBL is 1.94, Price to Sale is at 2.66 and for SOGO these ratios stand at 2.45 and 2.14.