The shares of Union Pacific Corporation (NYSE:UNP) and SM Energy Company (NYSE:SM) were among the active stocks of the last trading sessions. Union Pacific Corporation (NYSE:UNP) soared to 0.94% closing at the price of $148.56 whereas the shares of SM Energy Company (NYSE:SM) declined -6.1% with the decrease of -1.51 points closing at the price of $23.26. Union Pacific Corporation has currently increase 10.13% in its stock over the period of 6-months while its rival SM Energy Company subtracted -1.98% 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 Union Pacific Corporation (NYSE:UNP) is 12.8% while the ROI of SM Energy Company (NYSE:SM) is -0.9%. Another figure that is to be considered while analyzing the profitability of a share is its EBITDA margin, UNP’s EBITDA Margin is 12.09 whereas SM’s is 10.98.
Both the profitability ratios suggest that Union Pacific Corporation (NYSE:UNP) is more suitable investment in terms of profitability and return.
EPS & Surprise Factor
Union Pacific Corporation (NYSE:UNP) reported $2.15/share EPS for the previous quarter where analysts were predicting an EPS to be $2.1/share Thus beating the analyst Estimates with a Surprise Factor of 2.4 Percent. While, SM Energy Company (NYSE:SM) reported EPS of $-0.01/share in the last quarter. The analysts projected EPS of $0.16/share depicting a Surprise of -106.2 Percent.
Taking a look at Earnings per Share, Union Pacific Corporation tends to be beating the analyst estimates more than SM Energy Company. so UNP is more profitable than SM.
Technical Analysis of Union Pacific Corporation & SM Energy Company
Moving average convergence divergence (MACD) shows that Union Pacific Corporation (NYSE:UNP) is on a PRICE RELATIVITY trend While SM Energy Company (NYSE:SM) is on PRICE RELATIVITY trend. The trend for the past 10-days shows that the Union Pacific Corporation was in BULLISH territory and SM Energy Company was in BEARISH territory.
UNP’s current statistics gauge that the stock candle is BULLISH with HIGH volatility. While SM’s candle is BEARISH with HIGH.
EPS Growth Rate: UNP’s 18.27% versus SM’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 Union Pacific Corporation (NYSE:UNP) is predicted at 18.27% while SM Energy Company (NYSE:SM) stands at 0%. These numbers suggest that UNP 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 UNP stands at 1.1 while SM is at 0.9 whereas the debt ratio of the prior is 1.09 while the debt ratio of the later is 1.07.
The values of the both ratios suggest that UNP 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 2.4 for UNP and 2.2 for SM which means UNP has Hold rating whereas SM 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 UNP is $166.38 which is 10.71% of its current price while SM has price target of 37.11 which is 37.32% 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.
UNP currently has price to earning P/E ratio of 19.53 whereas SM has 17.12 while the forward P/E ratio for the prior stands at 16.58 and for the later it depicts the value of 12.01.
The price to Book P/B for UNP is 5.31, Price to Sale is at 4.86 and for SM these ratios stand at 0.95 and 1.95.