The shares of Extreme Networks, Inc. (NASDAQ:EXTR) and Wayfair Inc. (NYSE:W) were among the active stocks of the last trading sessions. Extreme Networks, Inc. (NASDAQ:EXTR) soared to 11.41% closing at the price of $6.54 whereas the shares of Wayfair Inc. (NYSE:W) declined -3.33% with the decrease of -3.2 points closing at the price of $92.96. Extreme Networks, Inc. has currently decrease -42.58% in its stock over the period of 6-months while its rival Wayfair Inc. added 13.15% 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 Extreme Networks, Inc. (NASDAQ:EXTR) is -12.4% while the ROI of Wayfair Inc. (NYSE:W) is -44.7%. Another figure that is to be considered while analyzing the profitability of a share is its EBITDA margin, EXTR’s EBITDA Margin is 8.35 whereas W’s is -40.43.
Both the profitability ratios suggest that Extreme Networks, Inc. (NASDAQ:EXTR) is more suitable investment in terms of profitability and return.
EPS & Surprise Factor
Extreme Networks, Inc. (NASDAQ:EXTR) reported $0.08/share EPS for the previous quarter where analysts were predicting an EPS to be $0.03/share Thus beating the analyst Estimates with a Surprise Factor of 166.7 Percent. While, Wayfair Inc. (NYSE:W) reported EPS of $-1.28/share in the last quarter. The analysts projected EPS of $-1.09/share depicting a Surprise of -17.4 Percent.
Taking a look at Earnings per Share, Extreme Networks, Inc. tends to be beating the analyst estimates more than Wayfair Inc.. so EXTR is more profitable than W.
Technical Analysis of Extreme Networks, Inc. & Wayfair Inc.
Moving average convergence divergence (MACD) shows that Extreme Networks, Inc. (NASDAQ:EXTR) is on a PRICE RELATIVITY trend While Wayfair Inc. (NYSE:W) is on PRICE RELATIVITY trend. The trend for the past 10-days shows that the Extreme Networks, Inc. was in BULLISH territory and Wayfair Inc. was in BEARISH territory.
EXTR’s current statistics gauge that the stock candle is BULLISH with HIGH volatility. While W’s candle is BEARISH with HIGH.
EPS Growth Rate: EXTR’s 20% versus W’s 17%
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 Extreme Networks, Inc. (NASDAQ:EXTR) is predicted at 20% while Wayfair Inc. (NYSE:W) stands at 17%. These numbers suggest that EXTR 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 EXTR stands at 1.2 while W is at 0.8 whereas the debt ratio of the prior is 1.75 while the debt ratio of the later is 0.
The values of the both ratios suggest that EXTR 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 2.2 for EXTR and 2.5 for W which means EXTR has Hold rating whereas W 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 EXTR is $9.38 which is 30.28% of its current price while W has price target of 122.86 which is 24.34% 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.
EXTR currently has price to earning P/E ratio of 0 whereas W has 0 while the forward P/E ratio for the prior stands at 8.79 and for the later it depicts the value of 0.
The price to Book P/B for EXTR is 6.74, Price to Sale is at 0.71 and for W these ratios stand at 0 and 1.39.