Which stock will you choose? Lennar Corporation (LEN) or Church & Dwight Company, Inc. (CHD)

The shares of Lennar Corporation (NYSE:LEN) and Church & Dwight Company, Inc. (NYSE:CHD) were among the active stocks of the last trading sessions. Lennar Corporation (NYSE:LEN) declined to -1.73% closing at the price of $43.28 whereas the shares of Church & Dwight Company, Inc. (NYSE:CHD) soared 1.83% with the increase of 1.19 points closing at the price of $66.06. Lennar Corporation has currently decrease -20.34% in its stock over the period of 6-months while its rival Church & Dwight Company, Inc. added 39.02% 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 Lennar Corporation (NYSE:LEN) is 4.9% while the ROI of Church & Dwight Company, Inc. (NYSE:CHD) is 11.1%. Another figure that is to be considered while analyzing the profitability of a share is its EBITDA margin, LEN’s EBITDA Margin is 13.03 whereas CHD’s is 17.72.

Both the profitability ratios suggest that Church & Dwight Company, Inc. (NYSE:CHD) is more suitable investment in terms of profitability and return.

EPS & Surprise Factor

Lennar Corporation (NYSE:LEN) reported $1.37/share EPS for the previous quarter where analysts were predicting an EPS to be $1.21/share Thus beating the analyst Estimates with a Surprise Factor of 13.2 Percent. While, Church & Dwight Company, Inc. (NYSE:CHD) reported EPS of $0.58/share in the last quarter. The analysts projected EPS of $0.54/share depicting a Surprise of 7.4 Percent.

Taking a look at Earnings per Share, Lennar Corporation tends to be beating the analyst estimates more than Church & Dwight Company, Inc.. so LEN is more profitable than CHD.

Technical Analysis of Lennar Corporation & Church & Dwight Company, Inc.

Moving average convergence divergence (MACD) shows that Lennar Corporation (NYSE:LEN) is on a PRICE RELATIVITY trend While Church & Dwight Company, Inc. (NYSE:CHD) is on PRICE RELATIVITY trend. The trend for the past 10-days shows that the Lennar Corporation was in BULLISH territory and Church & Dwight Company, Inc. was in BULLISH territory.

LEN’s current statistics gauge that the stock candle is BEARISH with HIGH volatility. While CHD’s candle is BULLISH with HIGH.

EPS Growth Rate: LEN’s 21.8% versus CHD’s 10.59%

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 Lennar Corporation (NYSE:LEN) is predicted at 21.8% while Church & Dwight Company, Inc. (NYSE:CHD) stands at 10.59%. These numbers suggest that LEN 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 LEN stands at 0 while CHD is at 0.9 whereas the debt ratio of the prior is 0.76 while the debt ratio of the later is 0.89.

The values of the both ratios suggest that CHD is more suitable investment when the liquidity and risk is the main concern.

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 1.8 for LEN and 2.8 for CHD which means LEN has Buy rating whereas CHD 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 LEN is $60.25 which is 28.17% of its current price while CHD has price target of 59.61 which is -10.82% 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.

LEN currently has price to earning P/E ratio of 10.27 whereas CHD has 29.68 while the forward P/E ratio for the prior stands at 6.51 and for the later it depicts the value of 26.86.

The price to Book P/B for LEN is 1.01, Price to Sale is at 0.8 and for CHD these ratios stand at 6.9 and 3.95.