The shares of Lumentum Holdings Inc. (NASDAQ:LITE) and Viking Therapeutics, Inc. (NASDAQ:VKTX) were among the active stocks of the last trading sessions. Lumentum Holdings Inc. (NASDAQ:LITE) declined to -7.07% closing at the price of $52.34 whereas the shares of Viking Therapeutics, Inc. (NASDAQ:VKTX) declined -5.88% with the decrease of -0.9 points closing at the price of $14.4. Lumentum Holdings Inc. has currently decrease -14.83% in its stock over the period of 6-months while its rival Viking Therapeutics, Inc. added 228.02% 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 Lumentum Holdings Inc. (NASDAQ:LITE) is 26.7% while the ROI of Viking Therapeutics, Inc. (NASDAQ:VKTX) is 0%. Another figure that is to be considered while analyzing the profitability of a share is its EBITDA margin, LITE’s EBITDA Margin is 14.75 whereas VKTX’s is NOT AVAILABLE.
Both the profitability ratios suggest a mixed sentiment for Lumentum Holdings Inc. (NASDAQ:LITE) and Viking Therapeutics, Inc. (NASDAQ:VKTX).
EPS & Surprise Factor
Lumentum Holdings Inc. (NASDAQ:LITE) reported $1.31/share EPS for the previous quarter where analysts were predicting an EPS to be $1.02/share Thus beating the analyst Estimates with a Surprise Factor of 28.4 Percent. While, Viking Therapeutics, Inc. (NASDAQ:VKTX) reported EPS of $-0.13/share in the last quarter. The analysts projected EPS of $-0.11/share depicting a Surprise of -18.2 Percent.
Taking a look at Earnings per Share, Lumentum Holdings Inc. tends to be beating the analyst estimates more than Viking Therapeutics, Inc.. so LITE is more profitable than VKTX.
Technical Analysis of Lumentum Holdings Inc. & Viking Therapeutics, Inc.
Moving average convergence divergence (MACD) shows that Lumentum Holdings Inc. (NASDAQ:LITE) is on a PRICE RELATIVITY trend While Viking Therapeutics, Inc. (NASDAQ:VKTX) is on PRICE RELATIVITY trend. The trend for the past 10-days shows that the Lumentum Holdings Inc. was in BEARISH territory and Viking Therapeutics, Inc. was in BULLISH territory.
LITE’s current statistics gauge that the stock candle is BEARISH with MEDIUM volatility. While VKTX’s candle is BEARISH with MEDIUM.
EPS Growth Rate: LITE’s 15.5% versus VKTX’s 40%
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 Lumentum Holdings Inc. (NASDAQ:LITE) is predicted at 15.5% while Viking Therapeutics, Inc. (NASDAQ:VKTX) stands at 40%. These numbers suggest that VKTX 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 LITE stands at 5.5 while VKTX is at 35.1 whereas the debt ratio of the prior is 0.35 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 1.8 for LITE and 1.9 for VKTX which means LITE has Buy rating whereas VKTX has Buy 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 LITE is $80.94 which is 35.33% of its current price while VKTX has price target of 32.33 which is 55.46% 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.
LITE currently has price to earning P/E ratio of 10.29 whereas VKTX has 0 while the forward P/E ratio for the prior stands at 9.52 and for the later it depicts the value of 0.
The price to Book P/B for LITE is 3.36, Price to Sale is at 2.86 and for VKTX these ratios stand at 5.41 and 0.