The shares of SAP SE (NYSE:SAP) and PACCAR Inc. (NASDAQ:PCAR) were among the active stocks of the last trading sessions. SAP SE (NYSE:SAP) declined to -7.58% closing at the price of $107.01 whereas the shares of PACCAR Inc. (NASDAQ:PCAR) declined -2.27% with the decrease of -1.4 points closing at the price of $60.34. SAP SE has currently increase 0.95% in its stock over the period of 6-months while its rival PACCAR Inc. subtracted -12.78% 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 SAP SE (NYSE:SAP) is 11.6% while the ROI of PACCAR Inc. (NASDAQ:PCAR) is 9%. Another figure that is to be considered while analyzing the profitability of a share is its EBITDA margin, SAP’s EBITDA Margin is 19.56 whereas PCAR’s is 9.
Both the profitability ratios suggest that SAP SE (NYSE:SAP) is more suitable investment in terms of profitability and return.
EPS & Surprise Factor
SAP SE (NYSE:SAP) reported $1.31/share EPS for the previous quarter where analysts were predicting an EPS to be $1.25/share Thus beating the analyst Estimates with a Surprise Factor of 4.8 Percent. While, PACCAR Inc. (NASDAQ:PCAR) reported EPS of $1.59/share in the last quarter. The analysts projected EPS of $1.42/share depicting a Surprise of 12 Percent.
Taking a look at Earnings per Share, PACCAR Inc. tends to be beating the analyst estimates more than SAP SE. so PCAR is more profitable than SAP.
Technical Analysis of SAP SE & PACCAR Inc.
Moving average convergence divergence (MACD) shows that SAP SE (NYSE:SAP) is on a PRICE RELATIVITY trend While PACCAR Inc. (NASDAQ:PCAR) is on PRICE RELATIVITY trend. The trend for the past 10-days shows that the SAP SE was in BEARISH territory and PACCAR Inc. was in BEARISH territory.
SAP’s current statistics gauge that the stock candle is BEARISH with HIGH volatility. While PCAR’s candle is BEARISH with HIGH.
EPS Growth Rate: SAP’s 8.93% versus PCAR’s 4.68%
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 SAP SE (NYSE:SAP) is predicted at 8.93% while PACCAR Inc. (NASDAQ:PCAR) stands at 4.68%. These numbers suggest that SAP 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 SAP stands at 1 while PCAR is at 4.7 whereas the debt ratio of the prior is 0.3 while the debt ratio of the later is 1.05.
The values of the both ratios suggest that PCAR is more suitable investment when the liquidity and risk is the main concern.
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 SAP and 2.9 for PCAR which means SAP has Hold rating whereas PCAR 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 SAP is $133.16 which is 19.64% of its current price while PCAR has price target of 71.5 which is 15.61% 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.
SAP currently has price to earning P/E ratio of 27.39 whereas PCAR has 11.27 while the forward P/E ratio for the prior stands at 18.81 and for the later it depicts the value of 9.81.
The price to Book P/B for SAP is 4.27, Price to Sale is at 4.68 and for PCAR these ratios stand at 2.42 and 0.97.