The shares of Terex Corporation (NYSE:TEX) and Honeywell International Inc. (NYSE:HON) were among the active stocks of the last trading sessions. Terex Corporation (NYSE:TEX) declined to -13.39% closing at the price of $31.18 whereas the shares of Honeywell International Inc. (NYSE:HON) soared 0.71% with the increase of 1.03 points closing at the price of $145.48. Terex Corporation has currently decrease -23.13% in its stock over the period of 6-months while its rival Honeywell International Inc. added 5.4% 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 Terex Corporation (NYSE:TEX) is 5.4% while the ROI of Honeywell International Inc. (NYSE:HON) is 9.8%. Another figure that is to be considered while analyzing the profitability of a share is its EBITDA margin, TEX’s EBITDA Margin is 8.98 whereas HON’s is 13.18.
Both the profitability ratios suggest that Honeywell International Inc. (NYSE:HON) is more suitable investment in terms of profitability and return.
EPS & Surprise Factor
Terex Corporation (NYSE:TEX) reported $0.68/share EPS for the previous quarter where analysts were predicting an EPS to be $0.77/share Thus lagging the analyst Estimates with a Surprise Factor of -11.7 Percent. While, Honeywell International Inc. (NYSE:HON) reported EPS of $2.03/share in the last quarter. The analysts projected EPS of $1.99/share depicting a Surprise of 2 Percent.
Taking a look at Earnings per Share, Honeywell International Inc. tends to be beating the analyst estimates more than Terex Corporation. so HON is more profitable than TEX.
Technical Analysis of Terex Corporation & Honeywell International Inc.
Moving average convergence divergence (MACD) shows that Terex Corporation (NYSE:TEX) is on a PRICE RELATIVITY trend While Honeywell International Inc. (NYSE:HON) is on PRICE RELATIVITY trend. The trend for the past 10-days shows that the Terex Corporation was in BULLISH territory and Honeywell International Inc. was in BEARISH territory.
TEX’s current statistics gauge that the stock candle is BULLISH with HIGH volatility. While HON’s candle is BULLISH with HIGH.
EPS Growth Rate: TEX’s 42.38% versus HON’s 6.41%
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 Terex Corporation (NYSE:TEX) is predicted at 42.38% while Honeywell International Inc. (NYSE:HON) stands at 6.41%. These numbers suggest that TEX 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 TEX stands at 2.1 while HON is at 1.5 whereas the debt ratio of the prior is 1.15 while the debt ratio of the later is 1.
The values of the both ratios suggest that TEX 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 2.8 for TEX and 1.8 for HON which means TEX has Hold rating whereas HON 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 TEX is $43.44 which is 28.22% of its current price while HON has price target of 173.1 which is 15.96% 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.
TEX currently has price to earning P/E ratio of 14.32 whereas HON has 25.55 while the forward P/E ratio for the prior stands at 8.43 and for the later it depicts the value of 18.19.
The price to Book P/B for TEX is 2.47, Price to Sale is at 0.55 and for HON these ratios stand at 5.92 and 2.51.