The shares of General Motors Company (NYSE:GM) and Acadia Healthcare Company, Inc. (NASDAQ:ACHC) were among the active stocks of the last trading sessions. General Motors Company (NYSE:GM) soared to 0.58% closing at the price of $36.46 whereas the shares of Acadia Healthcare Company, Inc. (NASDAQ:ACHC) declined -3.89% with the decrease of -1.58 points closing at the price of $39. General Motors Company has currently increase 0.52% in its stock over the period of 6-months while its rival Acadia Healthcare Company, Inc. subtracted -7.28% 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 General Motors Company (NYSE:GM) is 4.5% while the ROI of Acadia Healthcare Company, Inc. (NASDAQ:ACHC) is 6.1%. Another figure that is to be considered while analyzing the profitability of a share is its EBITDA margin, GM’s EBITDA Margin is 6.44 whereas ACHC’s is 11.38.
Both the profitability ratios suggest that Acadia Healthcare Company, Inc. (NASDAQ:ACHC) is more suitable investment in terms of profitability and return.
EPS & Surprise Factor
General Motors Company (NYSE:GM) reported $1.87/share EPS for the previous quarter where analysts were predicting an EPS to be $1.25/share Thus beating the analyst Estimates with a Surprise Factor of 49.6 Percent. While, Acadia Healthcare Company, Inc. (NASDAQ:ACHC) reported EPS of $0.55/share in the last quarter. The analysts projected EPS of $0.64/share depicting a Surprise of -14.1 Percent.
Taking a look at Earnings per Share, General Motors Company tends to be beating the analyst estimates more than Acadia Healthcare Company, Inc.. so GM is more profitable than ACHC.
Technical Analysis of General Motors Company & Acadia Healthcare Company, Inc.
Moving average convergence divergence (MACD) shows that General Motors Company (NYSE:GM) is on a PRICE RELATIVITY trend While Acadia Healthcare Company, Inc. (NASDAQ:ACHC) is on PRICE RELATIVITY trend. The trend for the past 10-days shows that the General Motors Company was in BULLISH territory and Acadia Healthcare Company, Inc. was in BULLISH territory.
GM’s current statistics gauge that the stock candle is BULLISH with HIGH volatility. While ACHC’s candle is BEARISH with HIGH.
EPS Growth Rate: GM’s 8.55% versus ACHC’s 11.56%
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 General Motors Company (NYSE:GM) is predicted at 8.55% while Acadia Healthcare Company, Inc. (NASDAQ:ACHC) stands at 11.56%. These numbers suggest that ACHC 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 GM stands at 0.9 while ACHC is at 1.2 whereas the debt ratio of the prior is 2.69 while the debt ratio of the later is 1.21.
The values of the both ratios suggest that one is more liquid and other investment is more risk free.
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 2.3 for GM and 2.1 for ACHC which means GM has Hold rating whereas ACHC 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 GM is $44.55 which is 18.16% of its current price while ACHC has price target of 43.38 which is 10.1% 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.
GM currently has price to earning P/E ratio of 6.19 whereas ACHC has 17.52 while the forward P/E ratio for the prior stands at 6.32 and for the later it depicts the value of 14.18.
The price to Book P/B for GM is 1.35, Price to Sale is at 0.36 and for ACHC these ratios stand at 1.28 and 1.17.