The shares of Eli Lilly and Company (NYSE:LLY) and MGIC Investment Corporation (NYSE:MTG) were among the active stocks of the last trading sessions. Eli Lilly and Company (NYSE:LLY) soared to 0.09% closing at the price of $108.44 whereas the shares of MGIC Investment Corporation (NYSE:MTG) soared 1.41% with the increase of 0.17 points closing at the price of $12.21. Eli Lilly and Company has currently increase 38.95% in its stock over the period of 6-months while its rival MGIC Investment Corporation added 17.18% 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 Eli Lilly and Company (NYSE:LLY) is 6.6% while the ROI of MGIC Investment Corporation (NYSE:MTG) is 13.7%. Another figure that is to be considered while analyzing the profitability of a share is its EBITDA margin, LLY’s EBITDA Margin is 16.15 whereas MTG’s is 4.9.
Both the profitability ratios suggest a mixed sentiment for Eli Lilly and Company (NYSE:LLY) and MGIC Investment Corporation (NYSE:MTG).
EPS & Surprise Factor
Eli Lilly and Company (NYSE:LLY) reported $1.5/share EPS for the previous quarter where analysts were predicting an EPS to be $1.3/share Thus beating the analyst Estimates with a Surprise Factor of 15.4 Percent. While, MGIC Investment Corporation (NYSE:MTG) reported EPS of $0.49/share in the last quarter. The analysts projected EPS of $0.36/share depicting a Surprise of 36.1 Percent.
Taking a look at Earnings per Share, MGIC Investment Corporation tends to be beating the analyst estimates more than Eli Lilly and Company. so MTG is more profitable than LLY.
Technical Analysis of Eli Lilly and Company & MGIC Investment Corporation
Moving average convergence divergence (MACD) shows that Eli Lilly and Company (NYSE:LLY) is on a PRICE RELATIVITY trend While MGIC Investment Corporation (NYSE:MTG) is on PRICE RELATIVITY trend. The trend for the past 10-days shows that the Eli Lilly and Company was in BEARISH territory and MGIC Investment Corporation was in BEARISH territory.
LLY’s current statistics gauge that the stock candle is BEARISH with HIGH volatility. While MTG’s candle is BULLISH with HIGH.
EPS Growth Rate: LLY’s 11.38% versus MTG’s 6.54%
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 Eli Lilly and Company (NYSE:LLY) is predicted at 11.38% while MGIC Investment Corporation (NYSE:MTG) stands at 6.54%. These numbers suggest that LLY 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 LLY stands at 1.4 while MTG is at 0 whereas the debt ratio of the prior is 1.06 while the debt ratio of the later is 0.25.
The values of the both ratios suggest that LLY 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 2.3 for LLY and 2.1 for MTG which means LLY has Hold rating whereas MTG 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 LLY is $112.06 which is 3.23% of its current price while MTG has price target of 15.88 which is 23.11% 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.
LLY currently has price to earning P/E ratio of 64.55 whereas MTG has 6.99 while the forward P/E ratio for the prior stands at 18.86 and for the later it depicts the value of 7.57.
The price to Book P/B for LLY is 9.66, Price to Sale is at 4.95 and for MTG these ratios stand at 1.36 and 4.03.