The shares of Johnson & Johnson (NYSE:JNJ) and Noble Corporation (NYSE:NE) were among the active stocks of the last trading sessions. Johnson & Johnson (NYSE:JNJ) declined to -0.1% closing at the price of $140.68 whereas the shares of Noble Corporation (NYSE:NE) declined -0.2% with the decrease of -0.01 points closing at the price of $4.87. Johnson & Johnson has currently increase 13.83% in its stock over the period of 6-months while its rival Noble Corporation added 1.67% 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 Johnson & Johnson (NYSE:JNJ) is 15.7% while the ROI of Noble Corporation (NYSE:NE) is -3.4%. Another figure that is to be considered while analyzing the profitability of a share is its EBITDA margin, JNJ’s EBITDA Margin is 13.78 whereas NE’s is 13.25.
Both the profitability ratios suggest that Johnson & Johnson (NYSE:JNJ) is more suitable investment in terms of profitability and return.
EPS & Surprise Factor
Johnson & Johnson (NYSE:JNJ) reported $2.05/share EPS for the previous quarter where analysts were predicting an EPS to be $2.03/share Thus beating the analyst Estimates with a Surprise Factor of 1 Percent. While, Noble Corporation (NYSE:NE) reported EPS of $-0.43/share in the last quarter. The analysts projected EPS of $-0.46/share depicting a Surprise of 6.5 Percent.
Taking a look at Earnings per Share, Noble Corporation tends to be beating the analyst estimates more than Johnson & Johnson. so NE is more profitable than JNJ.
Technical Analysis of Johnson & Johnson & Noble Corporation
Moving average convergence divergence (MACD) shows that Johnson & Johnson (NYSE:JNJ) is on a PRICE RELATIVITY trend While Noble Corporation (NYSE:NE) is on PRICE RELATIVITY trend. The trend for the past 10-days shows that the Johnson & Johnson was in BULLISH territory and Noble Corporation was in BEARISH territory.
JNJ’s current statistics gauge that the stock candle is BEARISH with HIGH volatility. While NE’s candle is BEARISH with HIGH.
EPS Growth Rate: JNJ’s 7.77% versus NE’s 5.99%
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 Johnson & Johnson (NYSE:JNJ) is predicted at 7.77% while Noble Corporation (NYSE:NE) stands at 5.99%. These numbers suggest that JNJ 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 JNJ stands at 1.7 while NE is at 2.1 whereas the debt ratio of the prior is 0.48 while the debt ratio of the later is 0.88.
The values of the both ratios suggest that NE 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 2.3 for JNJ and 3 for NE which means JNJ has Hold rating whereas NE 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 JNJ is $146.78 which is 4.16% of its current price while NE has price target of 6.59 which is 26.1% 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.
JNJ currently has price to earning P/E ratio of 25.36 whereas NE has 0 while the forward P/E ratio for the prior stands at 16.27 and for the later it depicts the value of 0.
The price to Book P/B for JNJ is 5.84, Price to Sale is at 4.64 and for NE these ratios stand at 0.28 and 1.09.