The shares of Kohl’s Corporation (NYSE:KSS) and Red Hat, Inc. (NYSE:RHT) were among the active stocks of the last trading sessions. Kohl’s Corporation (NYSE:KSS) soared to 1.69% closing at the price of $76.9 whereas the shares of Red Hat, Inc. (NYSE:RHT) declined -0.09% with the decrease of -0.16 points closing at the price of $172.24. Kohl’s Corporation has currently increase 27.36% in its stock over the period of 6-months while its rival Red Hat, Inc. added 2.06% 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 Kohl’s Corporation (NYSE:KSS) is 10.3% while the ROI of Red Hat, Inc. (NYSE:RHT) is 16.9%. Another figure that is to be considered while analyzing the profitability of a share is its EBITDA margin, KSS’s EBITDA Margin is 6.09 whereas RHT’s is 33.71.
Both the profitability ratios suggest that Red Hat, Inc. (NYSE:RHT) is more suitable investment in terms of profitability and return.
EPS & Surprise Factor
Kohl’s Corporation (NYSE:KSS) reported $1.76/share EPS for the previous quarter where analysts were predicting an EPS to be $1.64/share Thus beating the analyst Estimates with a Surprise Factor of 7.3 Percent. While, Red Hat, Inc. (NYSE:RHT) reported EPS of $0.85/share in the last quarter. The analysts projected EPS of $0.82/share depicting a Surprise of 3.7 Percent.
Taking a look at Earnings per Share, Kohl’s Corporation tends to be beating the analyst estimates more than Red Hat, Inc.. so KSS is more profitable than RHT.
Technical Analysis of Kohl’s Corporation & Red Hat, Inc.
Moving average convergence divergence (MACD) shows that Kohl’s Corporation (NYSE:KSS) is on a PRICE RELATIVITY trend While Red Hat, Inc. (NYSE:RHT) is on PRICE RELATIVITY trend. The trend for the past 10-days shows that the Kohl’s Corporation was in BULLISH territory and Red Hat, Inc. was in BULLISH territory.
KSS’s current statistics gauge that the stock candle is BEARISH with HIGH volatility. While RHT’s candle is BULLISH with HIGH.
EPS Growth Rate: KSS’s 11.09% versus RHT’s 16.3%
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 Kohl’s Corporation (NYSE:KSS) is predicted at 11.09% while Red Hat, Inc. (NYSE:RHT) stands at 16.3%. These numbers suggest that RHT 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 KSS stands at 1.8 while RHT is at 1.2 whereas the debt ratio of the prior is 0.72 while the debt ratio of the later is 0.4.
The values of the both ratios suggest that KSS 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 2.5 for KSS and 2.4 for RHT which means KSS has Hold rating whereas RHT 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 KSS is $82.06 which is 6.29% of its current price while RHT has price target of 177.13 which is 2.76% 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.
KSS currently has price to earning P/E ratio of 15.73 whereas RHT has 77.38 while the forward P/E ratio for the prior stands at 13.24 and for the later it depicts the value of 43.28.
The price to Book P/B for KSS is 2.31, Price to Sale is at 0.64 and for RHT these ratios stand at 23.59 and 9.61.