The shares of ConocoPhillips (NYSE:COP) and Builders FirstSource, Inc. (NASDAQ:BLDR) were among the active stocks of the last trading sessions. ConocoPhillips (NYSE:COP) declined to -2.5% closing at the price of $67.84 whereas the shares of Builders FirstSource, Inc. (NASDAQ:BLDR) soared 11.47% with the increase of 1.5 points closing at the price of $14.58. ConocoPhillips has currently increase 1.6% in its stock over the period of 6-months while its rival Builders FirstSource, Inc. subtracted -22.73% 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 ConocoPhillips (NYSE:COP) is -2.6% while the ROI of Builders FirstSource, Inc. (NASDAQ:BLDR) is 12.1%. Another figure that is to be considered while analyzing the profitability of a share is its EBITDA margin, COP’s EBITDA Margin is 7.16 whereas BLDR’s is 8.16.
Both the profitability ratios suggest that Builders FirstSource, Inc. (NASDAQ:BLDR) is more suitable investment in terms of profitability and return.
EPS & Surprise Factor
ConocoPhillips (NYSE:COP) reported $1.36/share EPS for the previous quarter where analysts were predicting an EPS to be $1.18/share Thus beating the analyst Estimates with a Surprise Factor of 15.3 Percent. While, Builders FirstSource, Inc. (NASDAQ:BLDR) reported EPS of $0.67/share in the last quarter. The analysts projected EPS of $0.6/share depicting a Surprise of 11.7 Percent.
Taking a look at Earnings per Share, ConocoPhillips tends to be beating the analyst estimates more than Builders FirstSource, Inc.. so COP is more profitable than BLDR.
Technical Analysis of ConocoPhillips & Builders FirstSource, Inc.
Moving average convergence divergence (MACD) shows that ConocoPhillips (NYSE:COP) is on a PRICE RELATIVITY trend While Builders FirstSource, Inc. (NASDAQ:BLDR) is on PRICE RELATIVITY trend. The trend for the past 10-days shows that the ConocoPhillips was in BEARISH territory and Builders FirstSource, Inc. was in BULLISH territory.
COP’s current statistics gauge that the stock candle is BEARISH with HIGH volatility. While BLDR’s candle is BULLISH with HIGH.
EPS Growth Rate: COP’s 0% versus BLDR’s 5%
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 ConocoPhillips (NYSE:COP) is predicted at 0% while Builders FirstSource, Inc. (NASDAQ:BLDR) stands at 5%. These numbers suggest that BLDR 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 COP stands at 2 while BLDR is at 2.1 whereas the debt ratio of the prior is 0.47 while the debt ratio of the later is 3.45.
The values of the both ratios suggest that BLDR 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 2.2 for COP and 1.9 for BLDR which means COP has Hold rating whereas BLDR 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 COP is $84.16 which is 19.39% of its current price while BLDR has price target of 20.36 which is 28.39% 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.
COP currently has price to earning P/E ratio of 15.65 whereas BLDR has 16.09 while the forward P/E ratio for the prior stands at 11.61 and for the later it depicts the value of 6.99.
The price to Book P/B for COP is 2.47, Price to Sale is at 2.23 and for BLDR these ratios stand at 3.11 and 0.22.