The shares of CBS Corporation (NYSE:CBS) and Summit Materials, Inc. (NYSE:SUM) were among the active stocks of the last trading sessions. CBS Corporation (NYSE:CBS) declined to -3.97% closing at the price of $56.17 whereas the shares of Summit Materials, Inc. (NYSE:SUM) soared 2.57% with the increase of 0.38 points closing at the price of $15.18. CBS Corporation has currently increase 7.15% in its stock over the period of 6-months while its rival Summit Materials, Inc. subtracted -48.82% 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 CBS Corporation (NYSE:CBS) is 17.7% while the ROI of Summit Materials, Inc. (NYSE:SUM) is 9.2%. Another figure that is to be considered while analyzing the profitability of a share is its EBITDA margin, CBS’s EBITDA Margin is 9.88 whereas SUM’s is 8.06.
Both the profitability ratios suggest that CBS Corporation (NYSE:CBS) is more suitable investment in terms of profitability and return.
EPS & Surprise Factor
CBS Corporation (NYSE:CBS) reported $1.24/share EPS for the previous quarter where analysts were predicting an EPS to be $1.22/share Thus beating the analyst Estimates with a Surprise Factor of 1.6 Percent. While, Summit Materials, Inc. (NYSE:SUM) reported EPS of $0.32/share in the last quarter. The analysts projected EPS of $0.53/share depicting a Surprise of -39.6 Percent.
Taking a look at Earnings per Share, CBS Corporation tends to be beating the analyst estimates more than Summit Materials, Inc.. so CBS is more profitable than SUM.
Technical Analysis of CBS Corporation & Summit Materials, Inc.
Moving average convergence divergence (MACD) shows that CBS Corporation (NYSE:CBS) is on a PRICE RELATIVITY trend While Summit Materials, Inc. (NYSE:SUM) is on PRICE RELATIVITY trend. The trend for the past 10-days shows that the CBS Corporation was in BULLISH territory and Summit Materials, Inc. was in BULLISH territory.
CBS’s current statistics gauge that the stock candle is BEARISH with HIGH volatility. While SUM’s candle is BULLISH with HIGH.
EPS Growth Rate: CBS’s 17.18% versus SUM’s 22.12%
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 CBS Corporation (NYSE:CBS) is predicted at 17.18% while Summit Materials, Inc. (NYSE:SUM) stands at 22.12%. These numbers suggest that SUM 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 CBS stands at 1.5 while SUM is at 2.1 whereas the debt ratio of the prior is 3.92 while the debt ratio of the later is 1.45.
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 2.3 for CBS and 1.5 for SUM which means CBS has Hold rating whereas SUM 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 CBS is $64.56 which is 13% of its current price while SUM has price target of 26.92 which is 43.61% 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.
CBS currently has price to earning P/E ratio of 12.34 whereas SUM has 0 while the forward P/E ratio for the prior stands at 9.71 and for the later it depicts the value of 11.81.
The price to Book P/B for CBS is 8.38, Price to Sale is at 1.54 and for SUM these ratios stand at 1.34 and 0.83.