Worth Comparing these two stocks: Intercontinental Exchange Inc. (ICE), Rio Tinto Plc (RIO)

The shares of Intercontinental Exchange Inc. (NYSE:ICE) and Rio Tinto Plc (NYSE:RIO) were among the active stocks of the last trading sessions. Intercontinental Exchange Inc. (NYSE:ICE) declined to -0.05% closing at the price of $73.53 whereas the shares of Rio Tinto Plc (NYSE:RIO) declined -2.35% with the decrease of -1.18 points closing at the price of $48.96. Intercontinental Exchange Inc. has currently decrease -1.13% in its stock over the period of 6-months while its rival Rio Tinto Plc subtracted -13.5% 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 Intercontinental Exchange Inc. (NYSE:ICE) is 7.1% while the ROI of Rio Tinto Plc (NYSE:RIO) is 17.3%. Another figure that is to be considered while analyzing the profitability of a share is its EBITDA margin, ICE’s EBITDA Margin is 5.01 whereas RIO’s is 6.11.

Both the profitability ratios suggest that Rio Tinto Plc (NYSE:RIO) is more suitable investment in terms of profitability and return.

EPS & Surprise Factor
Technical Analysis of Intercontinental Exchange Inc. & Rio Tinto Plc

Moving average convergence divergence (MACD) shows that Intercontinental Exchange Inc. (NYSE:ICE) is on a PRICE RELATIVITY trend While Rio Tinto Plc (NYSE:RIO) is on PRICE RELATIVITY trend. The trend for the past 10-days shows that the Intercontinental Exchange Inc. was in BEARISH territory and Rio Tinto Plc was in BEARISH territory.

ICE’s current statistics gauge that the stock candle is BEARISH with HIGH volatility. While RIO’s candle is BEARISH with LOW.

EPS Growth Rate: ICE’s 13.6% versus RIO’s -6.2%

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 Intercontinental Exchange Inc. (NYSE:ICE) is predicted at 13.6% while Rio Tinto Plc (NYSE:RIO) stands at -6.2%. These numbers suggest that ICE 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 ICE stands at 1 while RIO is at 1.5 whereas the debt ratio of the prior is 0.41 while the debt ratio of the later is 0.31.

The values of the both ratios suggest that one is more liquid and other investment is more risk free.

Analyst Recommendations

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 1.8 for ICE and 1.8 for RIO which means ICE has Buy rating whereas RIO has Buy 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 ICE is $83.8 which is 12.26% of its current price while RIO has price target of 61.93 which is 20.94% of its current price.

Valuation Ratios

Valuation is the process of determining the company’s worth for an investor, the valuation ratios give an insight to that worthiness.

ICE currently has price to earning P/E ratio of 24.69 whereas RIO has 8.45 while the forward P/E ratio for the prior stands at 18.97 and for the later it depicts the value of 10.15.

The price to Book P/B for ICE is 2.53, Price to Sale is at 8.76 and for RIO these ratios stand at 2.01 and 2.07.