Performance Comparison of Abbott Laboratories (ABT) and Western Digital Corporation (WDC)

The shares of Abbott Laboratories (NYSE:ABT) and Western Digital Corporation (NASDAQ:WDC) were among the active stocks of the last trading sessions. Abbott Laboratories (NYSE:ABT) soared to 0.81% closing at the price of $70.96 whereas the shares of Western Digital Corporation (NASDAQ:WDC) soared 1.12% with the increase of 0.54 points closing at the price of $48.9. Abbott Laboratories has currently increase 19.46% in its stock over the period of 6-months while its rival Western Digital Corporation subtracted -37.67% 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 Abbott Laboratories (NYSE:ABT) is 2.2% while the ROI of Western Digital Corporation (NASDAQ:WDC) is 16.4%. Another figure that is to be considered while analyzing the profitability of a share is its EBITDA margin, ABT’s EBITDA Margin is 20.93 whereas WDC’s is 3.8.

Both the profitability ratios suggest a mixed sentiment for Abbott Laboratories (NYSE:ABT) and Western Digital Corporation (NASDAQ:WDC).

EPS & Surprise Factor

Abbott Laboratories (NYSE:ABT) reported $0.75/share EPS for the previous quarter where analysts were predicting an EPS to be $0.75/share Thus meeting the analyst Estimates with a Surprise Factor of 0 Percent. While, Western Digital Corporation (NASDAQ:WDC) reported EPS of $3.04/share in the last quarter. The analysts projected EPS of $3.04/share depicting a Surprise of 0 Percent.

Taking a look at Earnings per Share, Western Digital Corporation tends to be beating the analyst estimates more than Abbott Laboratories. so WDC is more profitable than ABT.

Technical Analysis of Abbott Laboratories & Western Digital Corporation

Moving average convergence divergence (MACD) shows that Abbott Laboratories (NYSE:ABT) is on a PRICE RELATIVITY trend While Western Digital Corporation (NASDAQ:WDC) is on PRICE RELATIVITY trend. The trend for the past 10-days shows that the Abbott Laboratories was in BULLISH territory and Western Digital Corporation was in BEARISH territory.

ABT’s current statistics gauge that the stock candle is BULLISH with HIGH volatility. While WDC’s candle is BULLISH with HIGH.

EPS Growth Rate: ABT’s 11.47% versus WDC’s -2.7%

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 Abbott Laboratories (NYSE:ABT) is predicted at 11.47% while Western Digital Corporation (NASDAQ:WDC) stands at -2.7%. These numbers suggest that ABT 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 ABT stands at 1.4 while WDC is at 2.4 whereas the debt ratio of the prior is 0.77 while the debt ratio of the later is 0.97.

The values of the both ratios suggest that WDC 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 1.8 for ABT and 2.3 for WDC which means ABT has Buy rating whereas WDC 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 ABT is $78.94 which is 10.11% of its current price while WDC has price target of 72.2 which is 32.27% 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.

ABT currently has price to earning P/E ratio of 53.76 whereas WDC has 7.56 while the forward P/E ratio for the prior stands at 22.15 and for the later it depicts the value of 5.78.

The price to Book P/B for ABT is 4.07, Price to Sale is at 4.09 and for WDC these ratios stand at 1.27 and 0.68.