The shares of ABB Ltd (NYSE:ABB) and Dover Corporation (NYSE:DOV) were among the active stocks of the last trading sessions. ABB Ltd (NYSE:ABB) declined to -0.75% closing at the price of $21.21 whereas the shares of Dover Corporation (NYSE:DOV) soared 1.53% with the increase of 1.26 points closing at the price of $83.49. ABB Ltd has currently decrease -12.36% in its stock over the period of 6-months while its rival Dover Corporation added 7.72% 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 ABB Ltd (NYSE:ABB) is 11.5% while the ROI of Dover Corporation (NYSE:DOV) is 11.4%. Another figure that is to be considered while analyzing the profitability of a share is its EBITDA margin, ABB’s EBITDA Margin is 10.94 whereas DOV’s is 10.87.
Both the profitability ratios suggest that ABB Ltd (NYSE:ABB) is more suitable investment in terms of profitability and return.
EPS & Surprise Factor
ABB Ltd (NYSE:ABB) reported $0.38/share EPS for the previous quarter where analysts were predicting an EPS to be $0.35/share Thus beating the analyst Estimates with a Surprise Factor of 8.6 Percent. While, Dover Corporation (NYSE:DOV) reported EPS of $1.36/share in the last quarter. The analysts projected EPS of $1.29/share depicting a Surprise of 5.4 Percent.
Taking a look at Earnings per Share, ABB Ltd tends to be beating the analyst estimates more than Dover Corporation. so ABB is more profitable than DOV.
Technical Analysis of ABB Ltd & Dover Corporation
Moving average convergence divergence (MACD) shows that ABB Ltd (NYSE:ABB) is on a PRICE RELATIVITY trend While Dover Corporation (NYSE:DOV) is on PRICE RELATIVITY trend. The trend for the past 10-days shows that the ABB Ltd was in BEARISH territory and Dover Corporation was in BEARISH territory.
ABB’s current statistics gauge that the stock candle is BEARISH with HIGH volatility. While DOV’s candle is BULLISH with HIGH.
EPS Growth Rate: ABB’s 6.2% versus DOV’s 14.58%
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 ABB Ltd (NYSE:ABB) is predicted at 6.2% while Dover Corporation (NYSE:DOV) stands at 14.58%. These numbers suggest that DOV 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 ABB stands at 1.2 while DOV is at 1.3 whereas the debt ratio of the prior is 0.77 while the debt ratio of the later is 1.15.
The values of the both ratios suggest that DOV 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 2.8 for ABB and 2.5 for DOV which means ABB has Hold rating whereas DOV 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 ABB is $23.56 which is 9.97% of its current price while DOV has price target of 91.67 which is 8.92% 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.
ABB currently has price to earning P/E ratio of 20.51 whereas DOV has 18.69 while the forward P/E ratio for the prior stands at 13.84 and for the later it depicts the value of 14.94.
The price to Book P/B for ABB is 3.31, Price to Sale is at 1.3 and for DOV these ratios stand at 4.46 and 1.64.