The shares of Penn National Gaming, Inc. (NASDAQ:PENN) and American Eagle Outfitters, Inc. (NYSE:AEO) were among the active stocks of the last trading sessions. Penn National Gaming, Inc. (NASDAQ:PENN) soared to 0.03% closing at the price of $29.81 whereas the shares of American Eagle Outfitters, Inc. (NYSE:AEO) declined -2.47% with the decrease of -0.53 points closing at the price of $20.94. Penn National Gaming, Inc. has currently increase 8.4% in its stock over the period of 6-months while its rival American Eagle Outfitters, Inc. added 1.26% 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 Penn National Gaming, Inc. (NASDAQ:PENN) is 25% while the ROI of American Eagle Outfitters, Inc. (NYSE:AEO) is 16%. Another figure that is to be considered while analyzing the profitability of a share is its EBITDA margin, PENN’s EBITDA Margin is 8.4 whereas AEO’s is 6.27.
Both the profitability ratios suggest that Penn National Gaming, Inc. (NASDAQ:PENN) is more suitable investment in terms of profitability and return.
EPS & Surprise Factor
Penn National Gaming, Inc. (NASDAQ:PENN) reported $0.57/share EPS for the previous quarter where analysts were predicting an EPS to be $0.51/share Thus beating the analyst Estimates with a Surprise Factor of 11.8 Percent. While, American Eagle Outfitters, Inc. (NYSE:AEO) reported EPS of $0.34/share in the last quarter. The analysts projected EPS of $0.31/share depicting a Surprise of 9.7 Percent.
Taking a look at Earnings per Share, Penn National Gaming, Inc. tends to be beating the analyst estimates more than American Eagle Outfitters, Inc.. so PENN is more profitable than AEO.
Technical Analysis of Penn National Gaming, Inc. & American Eagle Outfitters, Inc.
Moving average convergence divergence (MACD) shows that Penn National Gaming, Inc. (NASDAQ:PENN) is on a PRICE RELATIVITY trend While American Eagle Outfitters, Inc. (NYSE:AEO) is on PRICE RELATIVITY trend. The trend for the past 10-days shows that the Penn National Gaming, Inc. was in BULLISH territory and American Eagle Outfitters, Inc. was in BEARISH territory.
PENN’s current statistics gauge that the stock candle is BULLISH with MEDIUM volatility. While AEO’s candle is BEARISH with LOW.
EPS Growth Rate: PENN’s 0% versus AEO’s 14.49%
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 Penn National Gaming, Inc. (NASDAQ:PENN) is predicted at 0% while American Eagle Outfitters, Inc. (NYSE:AEO) stands at 14.49%. These numbers suggest that AEO 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 PENN stands at 0.6 while AEO is at 2 whereas the debt ratio of the prior is 164.91 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 2.2 for PENN and 2.6 for AEO which means PENN has Hold rating whereas AEO 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 PENN is $38.09 which is 21.74% of its current price while AEO has price target of 26.27 which is 20.29% 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.
PENN currently has price to earning P/E ratio of 3.47 whereas AEO has 15.05 while the forward P/E ratio for the prior stands at 15.03 and for the later it depicts the value of 12.89.
The price to Book P/B for PENN is 99.37, Price to Sale is at 0.82 and for AEO these ratios stand at 2.95 and 0.91.