The shares of Cleveland-Cliffs Inc. (NYSE:CLF) and Infosys Limited (NYSE:INFY) were among the active stocks of the last trading sessions. Cleveland-Cliffs Inc. (NYSE:CLF) soared to 0.47% closing at the price of $10.73 whereas the shares of Infosys Limited (NYSE:INFY) declined -0.54% with the decrease of -0.05 points closing at the price of $9.25. Cleveland-Cliffs Inc. has currently increase 38.81% in its stock over the period of 6-months while its rival Infosys Limited added 6.08% 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 Cleveland-Cliffs Inc. (NYSE:CLF) is 5.5% while the ROI of Infosys Limited (NYSE:INFY) is 19.6%. Another figure that is to be considered while analyzing the profitability of a share is its EBITDA margin, CLF’s EBITDA Margin is 6.35 whereas INFY’s is 12.44.
Both the profitability ratios suggest that Infosys Limited (NYSE:INFY) is more suitable investment in terms of profitability and return.
EPS & Surprise Factor
Cleveland-Cliffs Inc. (NYSE:CLF) reported $1.41/share EPS for the previous quarter where analysts were predicting an EPS to be $0.66/share Thus beating the analyst Estimates with a Surprise Factor of 113.6 Percent. While, Infosys Limited (NYSE:INFY) reported EPS of $0.13/share in the last quarter. The analysts projected EPS of $0.13/share depicting a Surprise of 0 Percent.
Taking a look at Earnings per Share, Cleveland-Cliffs Inc. tends to be beating the analyst estimates more than Infosys Limited. so CLF is more profitable than INFY.
Technical Analysis of Cleveland-Cliffs Inc. & Infosys Limited
Moving average convergence divergence (MACD) shows that Cleveland-Cliffs Inc. (NYSE:CLF) is on a PRICE RELATIVITY trend While Infosys Limited (NYSE:INFY) is on PRICE RELATIVITY trend. The trend for the past 10-days shows that the Cleveland-Cliffs Inc. was in BEARISH territory and Infosys Limited was in BULLISH territory.
CLF’s current statistics gauge that the stock candle is BEARISH with HIGH volatility. While INFY’s candle is BEARISH with HIGH.
EPS Growth Rate: CLF’s -2.74% versus INFY’s 8%
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 Cleveland-Cliffs Inc. (NYSE:CLF) is predicted at -2.74% while Infosys Limited (NYSE:INFY) stands at 8%. These numbers suggest that INFY 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 CLF stands at 4.3 while INFY is at 3.3 whereas the debt ratio of the prior is 0 while the debt ratio of the later is 0.
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 2.2 for CLF and 2.9 for INFY which means CLF has Hold rating whereas INFY 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 CLF is $13.39 which is 19.87% of its current price while INFY has price target of 10.57 which is 12.49% 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.
CLF currently has price to earning P/E ratio of 10.2 whereas INFY has 18.14 while the forward P/E ratio for the prior stands at 6.32 and for the later it depicts the value of 16.43.
The price to Book P/B for CLF is 0, Price to Sale is at 1.42 and for INFY these ratios stand at 4.53 and 3.81.