Which Stock will you hold for a while? Starbucks Corporation (SBUX) or Real Goods Solar, Inc. (RGSE)

The shares of Starbucks Corporation (NASDAQ:SBUX) and Real Goods Solar, Inc. (NASDAQ:RGSE) were among the active stocks of the last trading sessions. Starbucks Corporation (NASDAQ:SBUX) soared to 9.7% closing at the price of $64.32 whereas the shares of Real Goods Solar, Inc. (NASDAQ:RGSE) soared 23.41% with the increase of 0.08 points closing at the price of $0.43. Starbucks Corporation has currently increase 11.96% in its stock over the period of 6-months while its rival Real Goods Solar, Inc. subtracted -56.99% 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 Starbucks Corporation (NASDAQ:SBUX) is 28.8% while the ROI of Real Goods Solar, Inc. (NASDAQ:RGSE) is 0%. Another figure that is to be considered while analyzing the profitability of a share is its EBITDA margin, SBUX’s EBITDA Margin is 16.63 whereas RGSE’s is -1.08.

Both the profitability ratios suggest that Starbucks Corporation (NASDAQ:SBUX) is more suitable investment in terms of profitability and return.

EPS & Surprise Factor

Starbucks Corporation (NASDAQ:SBUX) reported $0.62/share EPS for the previous quarter where analysts were predicting an EPS to be $0.6/share Thus beating the analyst Estimates with a Surprise Factor of 3.3 Percent. While, Real Goods Solar, Inc. (NASDAQ:RGSE) reported EPS of $-0.59/share in the last quarter. The analysts projected EPS of $-0.33/share depicting a Surprise of -78.8 Percent.

Taking a look at Earnings per Share, Starbucks Corporation tends to be beating the analyst estimates more than Real Goods Solar, Inc.. so SBUX is more profitable than RGSE.

Technical Analysis of Starbucks Corporation & Real Goods Solar, Inc.

Moving average convergence divergence (MACD) shows that Starbucks Corporation (NASDAQ:SBUX) is on a PRICE RELATIVITY trend While Real Goods Solar, Inc. (NASDAQ:RGSE) is on PRICE RELATIVITY trend. The trend for the past 10-days shows that the Starbucks Corporation was in BULLISH territory and Real Goods Solar, Inc. was in BULLISH territory.

SBUX’s current statistics gauge that the stock candle is BULLISH with HIGH volatility. While RGSE’s candle is BULLISH with HIGH.

EPS Growth Rate: SBUX’s 11.95% versus RGSE’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 Starbucks Corporation (NASDAQ:SBUX) is predicted at 11.95% while Real Goods Solar, Inc. (NASDAQ:RGSE) stands at 0%. These numbers suggest that SBUX 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 SBUX stands at 1 while RGSE is at 1.4 whereas the debt ratio of the prior is 1.7 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.

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 2.3 for SBUX and 0 for RGSE which means SBUX has Hold rating whereas RGSE has Strong 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 SBUX is $58.71 which is -9.56% of its current price while RGSE has price target of 2 which is 78.5% 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.

SBUX currently has price to earning P/E ratio of 19.49 whereas RGSE has 0 while the forward P/E ratio for the prior stands at 21.4 and for the later it depicts the value of 0.

The price to Book P/B for SBUX is 22.18, Price to Sale is at 3.67 and for RGSE these ratios stand at 0 and 1.17.