The shares of D.R. Horton, Inc. (NYSE:DHI) and CSX Corporation (NASDAQ:CSX) were among the active stocks of the last trading sessions. D.R. Horton, Inc. (NYSE:DHI) declined to -2.38% closing at the price of $36.09 whereas the shares of CSX Corporation (NASDAQ:CSX) declined -0.59% with the decrease of -0.41 points closing at the price of $69.18. D.R. Horton, Inc. has currently decrease -19.78% in its stock over the period of 6-months while its rival CSX Corporation added 14.35% 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 D.R. Horton, Inc. (NYSE:DHI) is 9.8% while the ROI of CSX Corporation (NASDAQ:CSX) is 9.4%. Another figure that is to be considered while analyzing the profitability of a share is its EBITDA margin, DHI’s EBITDA Margin is 7.76 whereas CSX’s is 11.55.
Both the profitability ratios suggest a mixed sentiment for D.R. Horton, Inc. (NYSE:DHI) and CSX Corporation (NASDAQ:CSX).
EPS & Surprise Factor
D.R. Horton, Inc. (NYSE:DHI) reported $1.18/share EPS for the previous quarter where analysts were predicting an EPS to be $1.08/share Thus beating the analyst Estimates with a Surprise Factor of 9.3 Percent. While, CSX Corporation (NASDAQ:CSX) reported EPS of $1.05/share in the last quarter. The analysts projected EPS of $0.95/share depicting a Surprise of 10.5 Percent.
Taking a look at Earnings per Share, CSX Corporation tends to be beating the analyst estimates more than D.R. Horton, Inc.. so CSX is more profitable than DHI.
Technical Analysis of D.R. Horton, Inc. & CSX Corporation
Moving average convergence divergence (MACD) shows that D.R. Horton, Inc. (NYSE:DHI) is on a PRICE RELATIVITY trend While CSX Corporation (NASDAQ:CSX) is on PRICE RELATIVITY trend. The trend for the past 10-days shows that the D.R. Horton, Inc. was in BULLISH territory and CSX Corporation was in BULLISH territory.
DHI’s current statistics gauge that the stock candle is BEARISH with MEDIUM volatility. While CSX’s candle is BEARISH with HIGH.
EPS Growth Rate: DHI’s 24.85% versus CSX’s 22.7%
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 D.R. Horton, Inc. (NYSE:DHI) is predicted at 24.85% while CSX Corporation (NASDAQ:CSX) stands at 22.7%. These numbers suggest that DHI 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 DHI stands at 0 while CSX is at 1.4 whereas the debt ratio of the prior is 0.36 while the debt ratio of the later is 1.
The values of the both ratios suggest that CSX 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 2.1 for DHI and 2.2 for CSX which means DHI has Hold rating whereas CSX 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 DHI is $49.94 which is 27.73% of its current price while CSX has price target of 81.57 which is 15.19% 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.
DHI currently has price to earning P/E ratio of 9.76 whereas CSX has 19.51 while the forward P/E ratio for the prior stands at 7.87 and for the later it depicts the value of 16.36.
The price to Book P/B for DHI is 1.58, Price to Sale is at 0.89 and for CSX these ratios stand at 4.29 and 4.91.