The shares of Archer-Daniels-Midland Company (NYSE:ADM) and Goldman Sachs Group, Inc. (The) (NYSE:GS) were among the active stocks of the last trading sessions. Archer-Daniels-Midland Company (NYSE:ADM) soared to 0.37% closing at the price of $49.21 whereas the shares of Goldman Sachs Group, Inc. (The) (NYSE:GS) declined -1.46% with the decrease of -3.33 points closing at the price of $224.95. Archer-Daniels-Midland Company has currently increase 8.15% in its stock over the period of 6-months while its rival Goldman Sachs Group, Inc. (The) subtracted -10.72% 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 Archer-Daniels-Midland Company (NYSE:ADM) is 3.1% while the ROI of Goldman Sachs Group, Inc. (The) (NYSE:GS) is 1.5%. Another figure that is to be considered while analyzing the profitability of a share is its EBITDA margin, ADM’s EBITDA Margin is 12.54 whereas GS’s is NOT AVAILABLE.
Both the profitability ratios suggest a mixed sentiment for Archer-Daniels-Midland Company (NYSE:ADM) and Goldman Sachs Group, Inc. (The) (NYSE:GS).
EPS & Surprise Factor
Archer-Daniels-Midland Company (NYSE:ADM) reported $1.02/share EPS for the previous quarter where analysts were predicting an EPS to be $0.77/share Thus beating the analyst Estimates with a Surprise Factor of 32.5 Percent. While, Goldman Sachs Group, Inc. (The) (NYSE:GS) reported EPS of $6.28/share in the last quarter. The analysts projected EPS of $5.38/share depicting a Surprise of 16.7 Percent.
Taking a look at Earnings per Share, Archer-Daniels-Midland Company tends to be beating the analyst estimates more than Goldman Sachs Group, Inc. (The). so ADM is more profitable than GS.
Technical Analysis of Archer-Daniels-Midland Company & Goldman Sachs Group, Inc. (The)
Moving average convergence divergence (MACD) shows that Archer-Daniels-Midland Company (NYSE:ADM) is on a PRICE RELATIVITY trend While Goldman Sachs Group, Inc. (The) (NYSE:GS) is on PRICE RELATIVITY trend. The trend for the past 10-days shows that the Archer-Daniels-Midland Company was in BEARISH territory and Goldman Sachs Group, Inc. (The) was in BULLISH territory.
ADM’s current statistics gauge that the stock candle is BULLISH with HIGH volatility. While GS’s candle is BEARISH with HIGH.
EPS Growth Rate: ADM’s -8.8% versus GS’s 30.95%
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 Archer-Daniels-Midland Company (NYSE:ADM) is predicted at -8.8% while Goldman Sachs Group, Inc. (The) (NYSE:GS) stands at 30.95%. These numbers suggest that GS 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 ADM stands at 1.6 while GS is at 0 whereas the debt ratio of the prior is 0.41 while the debt ratio of the later is 7.23.
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 2.1 for ADM and 2.3 for GS which means ADM has Hold rating whereas GS 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 ADM is $53.42 which is 7.88% of its current price while GS has price target of 275.78 which is 18.43% 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.
ADM currently has price to earning P/E ratio of 19.86 whereas GS has 9.47 while the forward P/E ratio for the prior stands at 13.55 and for the later it depicts the value of 8.91.
The price to Book P/B for ADM is 1.48, Price to Sale is at 0.44 and for GS these ratios stand at 1.15 and 1.73.