The shares of Kellogg Company (NYSE:K) and Graphic Packaging Holding Company (NYSE:GPK) were among the active stocks of the last trading sessions. Kellogg Company (NYSE:K) declined to -1.56% closing at the price of $63 whereas the shares of Graphic Packaging Holding Company (NYSE:GPK) soared 0.8% with the increase of 0.09 points closing at the price of $11.34. Kellogg Company has currently increase 4.15% in its stock over the period of 6-months while its rival Graphic Packaging Holding Company subtracted -18.77% 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 Kellogg Company (NYSE:K) is 14.2% while the ROI of Graphic Packaging Holding Company (NYSE:GPK) is 7.1%. Another figure that is to be considered while analyzing the profitability of a share is its EBITDA margin, K’s EBITDA Margin is 11.3 whereas GPK’s is 8.56.
Both the profitability ratios suggest that Kellogg Company (NYSE:K) is more suitable investment in terms of profitability and return.
EPS & Surprise Factor
Kellogg Company (NYSE:K) reported $1.06/share EPS for the previous quarter where analysts were predicting an EPS to be $1.06/share Thus meeting the analyst Estimates with a Surprise Factor of 0 Percent. While, Graphic Packaging Holding Company (NYSE:GPK) reported EPS of $0.22/share in the last quarter. The analysts projected EPS of $0.24/share depicting a Surprise of -8.3 Percent.
Taking a look at Earnings per Share, Kellogg Company tends to be beating the analyst estimates more than Graphic Packaging Holding Company. so K is more profitable than GPK.
Technical Analysis of Kellogg Company & Graphic Packaging Holding Company
Moving average convergence divergence (MACD) shows that Kellogg Company (NYSE:K) is on a PRICE RELATIVITY trend While Graphic Packaging Holding Company (NYSE:GPK) is on PRICE RELATIVITY trend. The trend for the past 10-days shows that the Kellogg Company was in BEARISH territory and Graphic Packaging Holding Company was in BULLISH territory.
K’s current statistics gauge that the stock candle is BEARISH with HIGH volatility. While GPK’s candle is BULLISH with HIGH.
EPS Growth Rate: K’s 4.91% versus GPK’s 14.36%
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 Kellogg Company (NYSE:K) is predicted at 4.91% while Graphic Packaging Holding Company (NYSE:GPK) stands at 14.36%. These numbers suggest that GPK 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 K stands at 0.8 while GPK is at 1.7 whereas the debt ratio of the prior is 2.93 while the debt ratio of the later is 1.64.
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 2.7 for K and 1.6 for GPK which means K has Hold rating whereas GPK 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 K is $70.26 which is 10.33% of its current price while GPK has price target of 15.45 which is 26.6% 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.
K currently has price to earning P/E ratio of 11.84 whereas GPK has 16.7 while the forward P/E ratio for the prior stands at 14.15 and for the later it depicts the value of 12.7.
The price to Book P/B for K is 7.18, Price to Sale is at 1.65 and for GPK these ratios stand at 1.97 and 0.62.