Comparing Profitability of these two stocks: Enphase Energy, Inc. (ENPH), United Microelectronics Corporation (UMC)

The shares of Enphase Energy, Inc. (NASDAQ:ENPH) and United Microelectronics Corporation (NYSE:UMC) were among the active stocks of the last trading sessions. Enphase Energy, Inc. (NASDAQ:ENPH) declined to -4.45% closing at the price of $5.15 whereas the shares of United Microelectronics Corporation (NYSE:UMC) soared 4.09% with the increase of 0.07 points closing at the price of $1.78. Enphase Energy, Inc. has currently increase 10.04% in its stock over the period of 6-months while its rival United Microelectronics Corporation subtracted -34.07% 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 Enphase Energy, Inc. (NASDAQ:ENPH) is -12.5% while the ROI of United Microelectronics Corporation (NYSE:UMC) is 1.4%. Another figure that is to be considered while analyzing the profitability of a share is its EBITDA margin, ENPH’s EBITDA Margin is 180.48 whereas UMC’s is 2.6.

Both the profitability ratios suggest a mixed sentiment for Enphase Energy, Inc. (NASDAQ:ENPH) and United Microelectronics Corporation (NYSE:UMC).

EPS & Surprise Factor

Enphase Energy, Inc. (NASDAQ:ENPH) reported $0.02/share EPS for the previous quarter where analysts were predicting an EPS to be $0.01/share Thus beating the analyst Estimates with a Surprise Factor of 100 Percent. While, United Microelectronics Corporation (NYSE:UMC) reported EPS of $0.02/share in the last quarter. The analysts projected EPS of $0.02/share depicting a Surprise of 0 Percent.

Taking a look at Earnings per Share, Enphase Energy, Inc. tends to be beating the analyst estimates more than United Microelectronics Corporation. so ENPH is more profitable than UMC.

Technical Analysis of Enphase Energy, Inc. & United Microelectronics Corporation

Moving average convergence divergence (MACD) shows that Enphase Energy, Inc. (NASDAQ:ENPH) is on a PRICE RELATIVITY trend While United Microelectronics Corporation (NYSE:UMC) is on PRICE RELATIVITY trend. The trend for the past 10-days shows that the Enphase Energy, Inc. was in BULLISH territory and United Microelectronics Corporation was in BEARISH territory.

ENPH’s current statistics gauge that the stock candle is BEARISH with HIGH volatility. While UMC’s candle is BULLISH with HIGH.

EPS Growth Rate: ENPH’s 0% versus UMC’s 20%

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 Enphase Energy, Inc. (NASDAQ:ENPH) is predicted at 0% while United Microelectronics Corporation (NYSE:UMC) stands at 20%. These numbers suggest that UMC 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 ENPH stands at 1.4 while UMC is at 2.7 whereas the debt ratio of the prior is 0 while the debt ratio of the later is 0.41.

The values of the both ratios suggest that UMC is more suitable investment when the liquidity and risk is the main concern.

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 ENPH and 2.5 for UMC which means ENPH has Buy rating whereas UMC 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 ENPH is $7.46 which is 30.97% of its current price while UMC has price target of 2.34 which is 23.93% 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.

ENPH currently has price to earning P/E ratio of 27.39 whereas UMC has 13.48 while the forward P/E ratio for the prior stands at 18.53 and for the later it depicts the value of 11.87.

The price to Book P/B for ENPH is 0, Price to Sale is at 1.57 and for UMC these ratios stand at 0.62 and 0.92.