The shares of Extreme Networks, Inc. (NASDAQ:EXTR) and Cardinal Health, Inc. (NYSE:CAH) were among the active stocks of the last trading sessions. Extreme Networks, Inc. (NASDAQ:EXTR) declined to -0.59% closing at the price of $6.69 whereas the shares of Cardinal Health, Inc. (NYSE:CAH) soared 0.84% with the increase of 0.44 points closing at the price of $52.53. Extreme Networks, Inc. has currently decrease -23.19% in its stock over the period of 6-months while its rival Cardinal Health, Inc. subtracted -0.44% 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 Extreme Networks, Inc. (NASDAQ:EXTR) is -12.4% while the ROI of Cardinal Health, Inc. (NYSE:CAH) is -1.9%. Another figure that is to be considered while analyzing the profitability of a share is its EBITDA margin, EXTR’s EBITDA Margin is 8.35 whereas CAH’s is 7.74.
Both the profitability ratios suggest a mixed sentiment for Extreme Networks, Inc. (NASDAQ:EXTR) and Cardinal Health, Inc. (NYSE:CAH).
EPS & Surprise Factor
Extreme Networks, Inc. (NASDAQ:EXTR) reported $0.08/share EPS for the previous quarter where analysts were predicting an EPS to be $0.03/share Thus beating the analyst Estimates with a Surprise Factor of 166.7 Percent. While, Cardinal Health, Inc. (NYSE:CAH) reported EPS of $1.01/share in the last quarter. The analysts projected EPS of $0.93/share depicting a Surprise of 8.6 Percent.
Taking a look at Earnings per Share, Extreme Networks, Inc. tends to be beating the analyst estimates more than Cardinal Health, Inc.. so EXTR is more profitable than CAH.
Technical Analysis of Extreme Networks, Inc. & Cardinal Health, Inc.
Moving average convergence divergence (MACD) shows that Extreme Networks, Inc. (NASDAQ:EXTR) is on a PRICE RELATIVITY trend While Cardinal Health, Inc. (NYSE:CAH) is on PRICE RELATIVITY trend. The trend for the past 10-days shows that the Extreme Networks, Inc. was in BULLISH territory and Cardinal Health, Inc. was in BULLISH territory.
EXTR’s current statistics gauge that the stock candle is BULLISH with HIGH volatility. While CAH’s candle is BULLISH with HIGH.
EPS Growth Rate: EXTR’s 20% versus CAH’s 4.95%
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 Extreme Networks, Inc. (NASDAQ:EXTR) is predicted at 20% while Cardinal Health, Inc. (NYSE:CAH) stands at 4.95%. These numbers suggest that EXTR 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 EXTR stands at 1.2 while CAH is at 1.1 whereas the debt ratio of the prior is 1.75 while the debt ratio of the later is 1.49.
The values of the both ratios suggest that EXTR 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 EXTR and 2.8 for CAH which means EXTR has Hold rating whereas CAH 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 EXTR is $9.38 which is 28.68% of its current price while CAH has price target of 55.43 which is 5.23% 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.
EXTR currently has price to earning P/E ratio of 0 whereas CAH has 0 while the forward P/E ratio for the prior stands at 8.99 and for the later it depicts the value of 9.71.
The price to Book P/B for EXTR is 6.9, Price to Sale is at 0.72 and for CAH these ratios stand at 2.69 and 0.12.