The shares of K2M Group Holdings, Inc. (NASDAQ:KTWO) and Baker Hughes, a GE company (NYSE:BHGE) were among the active stocks of the last trading sessions. K2M Group Holdings, Inc. (NASDAQ:KTWO) declined to -2.41% closing at the price of $26.72 whereas the shares of Baker Hughes, a GE company (NYSE:BHGE) soared 0.7% with the increase of 0.18 points closing at the price of $26.07. K2M Group Holdings, Inc. has currently increase 34.54% in its stock over the period of 6-months while its rival Baker Hughes, a GE company subtracted -26.83% 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 K2M Group Holdings, Inc. (NASDAQ:KTWO) is -10.1% while the ROI of Baker Hughes, a GE company (NYSE:BHGE) is -0.7%. Another figure that is to be considered while analyzing the profitability of a share is its EBITDA margin, KTWO’s EBITDA Margin is -95.31 whereas BHGE’s is 15.45.
Both the profitability ratios suggest that Baker Hughes, a GE company (NYSE:BHGE) is more suitable investment in terms of profitability and return.
EPS & Surprise Factor
K2M Group Holdings, Inc. (NASDAQ:KTWO) reported $-0.25/share EPS for the previous quarter where analysts were predicting an EPS to be $-0.19/share Thus lagging the analyst Estimates with a Surprise Factor of -31.6 Percent. While, Baker Hughes, a GE company (NYSE:BHGE) reported EPS of $0.19/share in the last quarter. The analysts projected EPS of $0.2/share depicting a Surprise of -5 Percent.
Taking a look at Earnings per Share, Baker Hughes, a GE company tends to be beating the analyst estimates more than K2M Group Holdings, Inc.. so BHGE is more profitable than KTWO.
Technical Analysis of K2M Group Holdings, Inc. & Baker Hughes, a GE company
Moving average convergence divergence (MACD) shows that K2M Group Holdings, Inc. (NASDAQ:KTWO) is on a PRICE RELATIVITY trend While Baker Hughes, a GE company (NYSE:BHGE) is on PRICE RELATIVITY trend. The trend for the past 10-days shows that the K2M Group Holdings, Inc. was in BEARISH territory and Baker Hughes, a GE company was in BEARISH territory.
KTWO’s current statistics gauge that the stock candle is BEARISH with MEDIUM volatility. While BHGE’s candle is BEARISH with HIGH.
EPS Growth Rate: KTWO’s 11% versus BHGE’s 0%
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 K2M Group Holdings, Inc. (NASDAQ:KTWO) is predicted at 11% while Baker Hughes, a GE company (NYSE:BHGE) stands at 0%. These numbers suggest that KTWO 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 KTWO stands at 3.5 while BHGE is at 1.9 whereas the debt ratio of the prior is 0.52 while the debt ratio of the later is 0.2.
The values of the both ratios suggest that KTWO 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 3 for KTWO and 2 for BHGE which means KTWO has Hold rating whereas BHGE 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 KTWO is $26.63 which is -0.34% of its current price while BHGE has price target of 36.85 which is 29.25% 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.
KTWO currently has price to earning P/E ratio of 0 whereas BHGE has 0 while the forward P/E ratio for the prior stands at 0 and for the later it depicts the value of 19.07.
The price to Book P/B for KTWO is 4.75, Price to Sale is at 4.39 and for BHGE these ratios stand at 0.29 and 1.27.