The shares of Weight Watchers International Inc (NYSE:WTW) and Square, Inc. (NYSE:SQ) were among the active stocks of the last trading sessions. Weight Watchers International Inc (NYSE:WTW) declined to -29.73% closing at the price of $48.13 whereas the shares of Square, Inc. (NYSE:SQ) soared 1.33% with the increase of 1.02 points closing at the price of $77.76. Weight Watchers International Inc has currently decrease -31.24% in its stock over the period of 6-months while its rival Square, Inc. added 52.11% 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 Weight Watchers International Inc (NYSE:WTW) is 25.1% while the ROI of Square, Inc. (NYSE:SQ) is -4.8%. Another figure that is to be considered while analyzing the profitability of a share is its EBITDA margin, WTW’s EBITDA Margin is 15.21 whereas SQ’s is -2377.15.
Both the profitability ratios suggest that Weight Watchers International Inc (NYSE:WTW) is more suitable investment in terms of profitability and return.
EPS & Surprise Factor
Weight Watchers International Inc (NYSE:WTW) reported $0.94/share EPS for the previous quarter where analysts were predicting an EPS to be $0.99/share Thus lagging the analyst Estimates with a Surprise Factor of -5.1 Percent. While, Square, Inc. (NYSE:SQ) reported EPS of $0.13/share in the last quarter. The analysts projected EPS of $0.12/share depicting a Surprise of 8.3 Percent.
Taking a look at Earnings per Share, Square, Inc. tends to be beating the analyst estimates more than Weight Watchers International Inc. so SQ is more profitable than WTW.
Technical Analysis of Weight Watchers International Inc & Square, Inc.
Moving average convergence divergence (MACD) shows that Weight Watchers International Inc (NYSE:WTW) is on a PRICE RELATIVITY trend While Square, Inc. (NYSE:SQ) is on PRICE RELATIVITY trend. The trend for the past 10-days shows that the Weight Watchers International Inc was in BEARISH territory and Square, Inc. was in BULLISH territory.
WTW’s current statistics gauge that the stock candle is BEARISH with HIGH volatility. While SQ’s candle is BULLISH with HIGH.
EPS Growth Rate: WTW’s 42% versus SQ’s 54.04%
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 Weight Watchers International Inc (NYSE:WTW) is predicted at 42% while Square, Inc. (NYSE:SQ) stands at 54.04%. These numbers suggest that SQ 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 WTW stands at 0.8 while SQ is at 2.2 whereas the debt ratio of the prior is 0 while the debt ratio of the later is 0.99.
The values of the both ratios suggest that SQ 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 for WTW and 2.5 for SQ which means WTW has Buy rating whereas SQ 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 WTW is $106 which is 54.59% of its current price while SQ has price target of 82.48 which is 5.72% 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.
WTW currently has price to earning P/E ratio of 20 whereas SQ has 0 while the forward P/E ratio for the prior stands at 13.14 and for the later it depicts the value of 100.21.
The price to Book P/B for WTW is 0, Price to Sale is at 3.05 and for SQ these ratios stand at 29.01 and 11.73.