Comparing Profitability of these two stocks: AcelRx Pharmaceuticals, Inc. (ACRX), Southern Company (The) (SO)

The shares of AcelRx Pharmaceuticals, Inc. (NASDAQ:ACRX) and Southern Company (The) (NYSE:SO) were among the active stocks of the last trading sessions. AcelRx Pharmaceuticals, Inc. (NASDAQ:ACRX) declined to -8.67% closing at the price of $3.9 whereas the shares of Southern Company (The) (NYSE:SO) soared 0.93% with the increase of 0.42 points closing at the price of $45.67. AcelRx Pharmaceuticals, Inc. has currently increase 56% in its stock over the period of 6-months while its rival Southern Company (The) added 4.29% 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 AcelRx Pharmaceuticals, Inc. (NASDAQ:ACRX) is -5.9% while the ROI of Southern Company (The) (NYSE:SO) is 2.9%. Another figure that is to be considered while analyzing the profitability of a share is its EBITDA margin, ACRX’s EBITDA Margin is -7 whereas SO’s is 11.95.

Both the profitability ratios suggest that Southern Company (The) (NYSE:SO) is more suitable investment in terms of profitability and return.

EPS & Surprise Factor

AcelRx Pharmaceuticals, Inc. (NASDAQ:ACRX) reported $-0.21/share EPS for the previous quarter where analysts were predicting an EPS to be $-0.21/share Thus meeting the analyst Estimates with a Surprise Factor of 0 Percent. While, Southern Company (The) (NYSE:SO) reported EPS of $0.8/share in the last quarter. The analysts projected EPS of $0.69/share depicting a Surprise of 15.9 Percent.

Taking a look at Earnings per Share, Southern Company (The) tends to be beating the analyst estimates more than AcelRx Pharmaceuticals, Inc.. so SO is more profitable than ACRX.

Technical Analysis of AcelRx Pharmaceuticals, Inc. & Southern Company (The)

Moving average convergence divergence (MACD) shows that AcelRx Pharmaceuticals, Inc. (NASDAQ:ACRX) is on a PRICE RELATIVITY trend While Southern Company (The) (NYSE:SO) is on PRICE RELATIVITY trend. The trend for the past 10-days shows that the AcelRx Pharmaceuticals, Inc. was in BULLISH territory and Southern Company (The) was in BEARISH territory.

ACRX’s current statistics gauge that the stock candle is BEARISH with HIGH volatility. While SO’s candle is BULLISH with MEDIUM.

EPS Growth Rate: ACRX’s 0% versus SO’s 1.37%

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 AcelRx Pharmaceuticals, Inc. (NASDAQ:ACRX) is predicted at 0% while Southern Company (The) (NYSE:SO) stands at 1.37%. These numbers suggest that SO 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 ACRX stands at 4 while SO is at 0.8 whereas the debt ratio of the prior is 0 while the debt ratio of the later is 2.1.

The values of the both ratios suggest that one is more liquid and other investment is more risk free.

Analyst Recommendations

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 for ACRX and 3.4 for SO which means ACRX has Buy rating whereas SO has Sell 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 ACRX is $8.33 which is 53.18% of its current price while SO has price target of 45.67 which is 0% of its current price.

Valuation Ratios

Valuation is the process of determining the company’s worth for an investor, the valuation ratios give an insight to that worthiness.

ACRX currently has price to earning P/E ratio of 0 whereas SO has 22.26 while the forward P/E ratio for the prior stands at 0 and for the later it depicts the value of 15.15.

The price to Book P/B for ACRX is 0, Price to Sale is at 60.11 and for SO these ratios stand at 1.96 and 1.95.