The shares of Microchip Technology Incorporated (NASDAQ:MCHP) and Consolidated Edison Inc (NYSE:ED) were among the active stocks of the last trading sessions. Microchip Technology Incorporated (NASDAQ:MCHP) declined to -0.9% closing at the price of $69.74 whereas the shares of Consolidated Edison Inc (NYSE:ED) declined -1.44% with the decrease of -1.09 points closing at the price of $74.54. Microchip Technology Incorporated has currently decrease -21.41% in its stock over the period of 6-months while its rival Consolidated Edison Inc subtracted -4.87% 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 Microchip Technology Incorporated (NASDAQ:MCHP) is 15.1% while the ROI of Consolidated Edison Inc (NYSE:ED) is 23.3%. Another figure that is to be considered while analyzing the profitability of a share is its EBITDA margin, MCHP’s EBITDA Margin is 16.89 whereas ED’s is 10.47.
Both the profitability ratios suggest a mixed sentiment for Microchip Technology Incorporated (NASDAQ:MCHP) and Consolidated Edison Inc (NYSE:ED).
EPS & Surprise Factor
Microchip Technology Incorporated (NASDAQ:MCHP) reported $1.61/share EPS for the previous quarter where analysts were predicting an EPS to be $1.48/share Thus beating the analyst Estimates with a Surprise Factor of 8.8 Percent. While, Consolidated Edison Inc (NYSE:ED) reported EPS of $1.57/share in the last quarter. The analysts projected EPS of $1.46/share depicting a Surprise of 7.5 Percent.
Taking a look at Earnings per Share, Microchip Technology Incorporated tends to be beating the analyst estimates more than Consolidated Edison Inc. so MCHP is more profitable than ED.
Technical Analysis of Microchip Technology Incorporated & Consolidated Edison Inc
Moving average convergence divergence (MACD) shows that Microchip Technology Incorporated (NASDAQ:MCHP) is on a PRICE RELATIVITY trend While Consolidated Edison Inc (NYSE:ED) is on PRICE RELATIVITY trend. The trend for the past 10-days shows that the Microchip Technology Incorporated was in BULLISH territory and Consolidated Edison Inc was in BEARISH territory.
MCHP’s current statistics gauge that the stock candle is BEARISH with HIGH volatility. While ED’s candle is BEARISH with HIGH.
EPS Growth Rate: MCHP’s 15.1% versus ED’s 2.88%
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 Microchip Technology Incorporated (NASDAQ:MCHP) is predicted at 15.1% while Consolidated Edison Inc (NYSE:ED) stands at 2.88%. These numbers suggest that MCHP 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 MCHP stands at 1.3 while ED is at 0.6 whereas the debt ratio of the prior is 2.22 while the debt ratio of the later is 1.13.
The values of the both ratios suggest that MCHP 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 1.9 for MCHP and 3.4 for ED which means MCHP has Buy rating whereas ED has Sell 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 MCHP is $106.47 which is 34.5% of its current price while ED has price target of 77.73 which is 4.1% 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.
MCHP currently has price to earning P/E ratio of 26.17 whereas ED has 3.37 while the forward P/E ratio for the prior stands at 9.31 and for the later it depicts the value of 17.23.
The price to Book P/B for MCHP is 3.2, Price to Sale is at 3.93 and for ED these ratios stand at 1.46 and 1.92.