Long-Term Investment or Short-Term? Mobile TeleSystems OJSC (MBT), Companhia de saneamento Basico Do Estado De Sao Paulo – Sabesp (SBS)

The shares of Mobile TeleSystems OJSC (NYSE:MBT) and Companhia de saneamento Basico Do Estado De Sao Paulo – Sabesp (NYSE:SBS) were among the active stocks of the last trading sessions. Mobile TeleSystems OJSC (NYSE:MBT) soared to 0.61% closing at the price of $8.24 whereas the shares of Companhia de saneamento Basico Do Estado De Sao Paulo – Sabesp (NYSE:SBS) soared 2.38% with the increase of 0.18 points closing at the price of $7.74. Mobile TeleSystems OJSC has currently decrease -20.62% in its stock over the period of 6-months while its rival Companhia de saneamento Basico Do Estado De Sao Paulo – Sabesp subtracted -15.13% 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 Mobile TeleSystems OJSC (NYSE:MBT) is 18.2% while the ROI of Companhia de saneamento Basico Do Estado De Sao Paulo – Sabesp (NYSE:SBS) is 10.1%. Another figure that is to be considered while analyzing the profitability of a share is its EBITDA margin, MBT’s EBITDA Margin is 3.54 whereas SBS’s is 5.39.

Both the profitability ratios suggest a mixed sentiment for Mobile TeleSystems OJSC (NYSE:MBT) and Companhia de saneamento Basico Do Estado De Sao Paulo – Sabesp (NYSE:SBS).

EPS & Surprise Factor

Mobile TeleSystems OJSC (NYSE:MBT) reported $0.23/share EPS for the previous quarter where analysts were predicting an EPS to be $0.25/share Thus lagging the analyst Estimates with a Surprise Factor of -8 Percent. While, Companhia de saneamento Basico Do Estado De Sao Paulo – Sabesp (NYSE:SBS) reported EPS of $0.07/share in the last quarter. The analysts projected EPS of $0.1/share depicting a Surprise of -30 Percent.

Taking a look at Earnings per Share, Mobile TeleSystems OJSC tends to be beating the analyst estimates more than Companhia de saneamento Basico Do Estado De Sao Paulo – Sabesp. so MBT is more profitable than SBS.

Technical Analysis of Mobile TeleSystems OJSC & Companhia de saneamento Basico Do Estado De Sao Paulo – Sabesp

Moving average convergence divergence (MACD) shows that Mobile TeleSystems OJSC (NYSE:MBT) is on a PRICE RELATIVITY trend While Companhia de saneamento Basico Do Estado De Sao Paulo – Sabesp (NYSE:SBS) is on PRICE RELATIVITY trend. The trend for the past 10-days shows that the Mobile TeleSystems OJSC was in BULLISH territory and Companhia de saneamento Basico Do Estado De Sao Paulo – Sabesp was in BULLISH territory.

MBT’s current statistics gauge that the stock candle is BULLISH with MEDIUM volatility. While SBS’s candle is BULLISH with MEDIUM.

EPS Growth Rate: MBT’s 0.16% versus SBS’s 10.71%

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 Mobile TeleSystems OJSC (NYSE:MBT) is predicted at 0.16% while Companhia de saneamento Basico Do Estado De Sao Paulo – Sabesp (NYSE:SBS) stands at 10.71%. These numbers suggest that SBS 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 MBT stands at 0.9 while SBS is at 1.2 whereas the debt ratio of the prior is 4.28 while the debt ratio of the later is 0.72.

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 2 for MBT and 2.5 for SBS which means MBT has Buy rating whereas SBS 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 MBT is $10.91 which is 24.47% of its current price while SBS has price target of 8.74 which is 11.44% 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.

MBT currently has price to earning P/E ratio of 8.94 whereas SBS has 8.6 while the forward P/E ratio for the prior stands at 7.95 and for the later it depicts the value of 1.76.

The price to Book P/B for MBT is 4.74, Price to Sale is at 1.14 and for SBS these ratios stand at 1.07 and 1.28.