The shares of McDonald’s Corporation (NYSE:MCD) and Hecla Mining Company (NYSE:HL) were among the active stocks of the last trading sessions. McDonald’s Corporation (NYSE:MCD) soared to 1.29% closing at the price of $182.71 whereas the shares of Hecla Mining Company (NYSE:HL) declined -3.86% with the decrease of -0.1 points closing at the price of $2.49. McDonald’s Corporation has currently increase 11.25% in its stock over the period of 6-months while its rival Hecla Mining Company subtracted -36.96% 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 McDonald’s Corporation (NYSE:MCD) is 26.2% while the ROI of Hecla Mining Company (NYSE:HL) is 0.7%. Another figure that is to be considered while analyzing the profitability of a share is its EBITDA margin, MCD’s EBITDA Margin is 16.88 whereas HL’s is 7.27.
Both the profitability ratios suggest that McDonald’s Corporation (NYSE:MCD) is more suitable investment in terms of profitability and return.
EPS & Surprise Factor
Technical Analysis of McDonald’s Corporation & Hecla Mining Company
Moving average convergence divergence (MACD) shows that McDonald’s Corporation (NYSE:MCD) is on a PRICE RELATIVITY trend While Hecla Mining Company (NYSE:HL) is on PRICE RELATIVITY trend. The trend for the past 10-days shows that the McDonald’s Corporation was in BULLISH territory and Hecla Mining Company was in BULLISH territory.
MCD’s current statistics gauge that the stock candle is BULLISH with HIGH volatility. While HL’s candle is BEARISH with LOW.
EPS Growth Rate: MCD’s 9.3% versus HL’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 McDonald’s Corporation (NYSE:MCD) is predicted at 9.3% while Hecla Mining Company (NYSE:HL) stands at 0%. These numbers suggest that MCD 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 MCD stands at 1.5 while HL is at 3.3 whereas the debt ratio of the prior is 0 while the debt ratio of the later is 0.37.
The values of the both ratios suggest that HL 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 for MCD and 2.8 for HL which means MCD has Buy rating whereas HL 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 MCD is $191.81 which is 4.74% of its current price while HL has price target of 3.97 which is 37.28% 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.
MCD currently has price to earning P/E ratio of 24.27 whereas HL has 0 while the forward P/E ratio for the prior stands at 22.2 and for the later it depicts the value of 45.27.
The price to Book P/B for MCD is 0, Price to Sale is at 6.72 and for HL these ratios stand at 0.66 and 2.