The shares of ArcelorMittal (NYSE:MT) and Valero Energy Corporation (NYSE:VLO) were among the active stocks of the last trading sessions. ArcelorMittal (NYSE:MT) soared to 0.99% closing at the price of $25.5 whereas the shares of Valero Energy Corporation (NYSE:VLO) declined -0.74% with the decrease of -0.68 points closing at the price of $91.83. ArcelorMittal has currently decrease -26.72% in its stock over the period of 6-months while its rival Valero Energy Corporation subtracted -19.21% 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 ArcelorMittal (NYSE:MT) is 9.7% while the ROI of Valero Energy Corporation (NYSE:VLO) is 8.7%. Another figure that is to be considered while analyzing the profitability of a share is its EBITDA margin, MT’s EBITDA Margin is 4.32 whereas VLO’s is 7.06.
Both the profitability ratios suggest a mixed sentiment for ArcelorMittal (NYSE:MT) and Valero Energy Corporation (NYSE:VLO).
EPS & Surprise Factor
ArcelorMittal (NYSE:MT) reported $2.19/share EPS for the previous quarter where analysts were predicting an EPS to be $1.49/share Thus beating the analyst Estimates with a Surprise Factor of 47 Percent. While, Valero Energy Corporation (NYSE:VLO) reported EPS of $2.01/share in the last quarter. The analysts projected EPS of $1.95/share depicting a Surprise of 3.1 Percent.
Taking a look at Earnings per Share, ArcelorMittal tends to be beating the analyst estimates more than Valero Energy Corporation. so MT is more profitable than VLO.
Technical Analysis of ArcelorMittal & Valero Energy Corporation
Moving average convergence divergence (MACD) shows that ArcelorMittal (NYSE:MT) is on a PRICE RELATIVITY trend While Valero Energy Corporation (NYSE:VLO) is on PRICE RELATIVITY trend. The trend for the past 10-days shows that the ArcelorMittal was in BEARISH territory and Valero Energy Corporation was in BULLISH territory.
MT’s current statistics gauge that the stock candle is BEARISH with HIGH volatility. While VLO’s candle is BEARISH with HIGH.
EPS Growth Rate: MT’s 9.73% versus VLO’s 43.81%
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 ArcelorMittal (NYSE:MT) is predicted at 9.73% while Valero Energy Corporation (NYSE:VLO) stands at 43.81%. These numbers suggest that VLO 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 MT stands at 1.4 while VLO is at 1.7 whereas the debt ratio of the prior is 0.32 while the debt ratio of the later is 0.42.
The values of the both ratios suggest that VLO 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 1.5 for MT and 2.2 for VLO which means MT has Buy rating whereas VLO 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 MT is $42.15 which is 39.5% of its current price while VLO has price target of 125 which is 26.54% 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.
MT currently has price to earning P/E ratio of 4.92 whereas VLO has 15.04 while the forward P/E ratio for the prior stands at 5.28 and for the later it depicts the value of 9.29.
The price to Book P/B for MT is 0.64, Price to Sale is at 0.34 and for VLO these ratios stand at 1.81 and 0.37.