Which stock will give more? Alcoa Corporation (AA) or Phillips 66 (PSX)

The shares of Alcoa Corporation (NYSE:AA) and Phillips 66 (NYSE:PSX) were among the active stocks of the last trading sessions. Alcoa Corporation (NYSE:AA) soared to 0.41% closing at the price of $36.93 whereas the shares of Phillips 66 (NYSE:PSX) declined -3.4% with the decrease of -3.49 points closing at the price of $99.01. Alcoa Corporation has currently decrease -32.3% in its stock over the period of 6-months while its rival Phillips 66 subtracted -14.21% 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 Alcoa Corporation (NYSE:AA) is 10.6% while the ROI of Phillips 66 (NYSE:PSX) is 2.6%. Another figure that is to be considered while analyzing the profitability of a share is its EBITDA margin, AA’s EBITDA Margin is 3.36 whereas PSX’s is 13.98.

Both the profitability ratios suggest a mixed sentiment for Alcoa Corporation (NYSE:AA) and Phillips 66 (NYSE:PSX).

EPS & Surprise Factor

Alcoa Corporation (NYSE:AA) reported $0.63/share EPS for the previous quarter where analysts were predicting an EPS to be $0.36/share Thus beating the analyst Estimates with a Surprise Factor of 75 Percent. While, Phillips 66 (NYSE:PSX) reported EPS of $3.1/share in the last quarter. The analysts projected EPS of $2.48/share depicting a Surprise of 25 Percent.

Taking a look at Earnings per Share, Alcoa Corporation tends to be beating the analyst estimates more than Phillips 66. so AA is more profitable than PSX.

Technical Analysis of Alcoa Corporation & Phillips 66

Moving average convergence divergence (MACD) shows that Alcoa Corporation (NYSE:AA) is on a PRICE RELATIVITY trend While Phillips 66 (NYSE:PSX) is on PRICE RELATIVITY trend. The trend for the past 10-days shows that the Alcoa Corporation was in BEARISH territory and Phillips 66 was in BULLISH territory.

AA’s current statistics gauge that the stock candle is BEARISH with MEDIUM volatility. While PSX’s candle is BEARISH with HIGH.

EPS Growth Rate: AA’s 8.9% versus PSX’s 49.4%

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 Alcoa Corporation (NYSE:AA) is predicted at 8.9% while Phillips 66 (NYSE:PSX) stands at 49.4%. These numbers suggest that PSX 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 AA stands at 1.4 while PSX is at 1.3 whereas the debt ratio of the prior is 0.38 while the debt ratio of the later is 0.49.

The values of the both ratios suggest that one is more liquid and other investment is more risk free.

Analyst Recommendations

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 for AA and 2.3 for PSX which means AA has Buy rating whereas PSX 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 AA is $58.14 which is 36.48% of its current price while PSX has price target of 129.81 which is 23.73% of its current price.

Valuation Ratios

Valuation is the process of determining the company’s worth for an investor, the valuation ratios give an insight to that worthiness.

AA currently has price to earning P/E ratio of 1273.45 whereas PSX has 12.5 while the forward P/E ratio for the prior stands at 9.23 and for the later it depicts the value of 10.09.

The price to Book P/B for AA is 1.37, Price to Sale is at 0.52 and for PSX these ratios stand at 1.98 and 0.42.