The shares of STMicroelectronics N.V. (NYSE:STM) and Honeywell International Inc. (NYSE:HON) were among the active stocks of the last trading sessions. STMicroelectronics N.V. (NYSE:STM) soared to 1.38% closing at the price of $15.42 whereas the shares of Honeywell International Inc. (NYSE:HON) soared 0.86% with the increase of 1.27 points closing at the price of $148.45. STMicroelectronics N.V. has currently decrease -34.74% in its stock over the period of 6-months while its rival Honeywell International Inc. added 6.42% 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 STMicroelectronics N.V. (NYSE:STM) is 11.3% while the ROI of Honeywell International Inc. (NYSE:HON) is 9.8%. Another figure that is to be considered while analyzing the profitability of a share is its EBITDA margin, STM’s EBITDA Margin is 6.96 whereas HON’s is 13.18.
Both the profitability ratios suggest a mixed sentiment for STMicroelectronics N.V. (NYSE:STM) and Honeywell International Inc. (NYSE:HON).
EPS & Surprise Factor
STMicroelectronics N.V. (NYSE:STM) reported $0.41/share EPS for the previous quarter where analysts were predicting an EPS to be $0.37/share Thus beating the analyst Estimates with a Surprise Factor of 10.8 Percent. While, Honeywell International Inc. (NYSE:HON) reported EPS of $2.03/share in the last quarter. The analysts projected EPS of $1.99/share depicting a Surprise of 2 Percent.
Taking a look at Earnings per Share, STMicroelectronics N.V. tends to be beating the analyst estimates more than Honeywell International Inc.. so STM is more profitable than HON.
Technical Analysis of STMicroelectronics N.V. & Honeywell International Inc.
Moving average convergence divergence (MACD) shows that STMicroelectronics N.V. (NYSE:STM) is on a PRICE RELATIVITY trend While Honeywell International Inc. (NYSE:HON) is on PRICE RELATIVITY trend. The trend for the past 10-days shows that the STMicroelectronics N.V. was in BULLISH territory and Honeywell International Inc. was in BULLISH territory.
STM’s current statistics gauge that the stock candle is BULLISH with HIGH volatility. While HON’s candle is BULLISH with HIGH.
EPS Growth Rate: STM’s 49% versus HON’s 6.41%
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 STMicroelectronics N.V. (NYSE:STM) is predicted at 49% while Honeywell International Inc. (NYSE:HON) stands at 6.41%. These numbers suggest that STM 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 STM stands at 2.4 while HON is at 1.5 whereas the debt ratio of the prior is 0.31 while the debt ratio of the later is 1.
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 3 for STM and 1.8 for HON which means STM has Hold rating whereas HON has Buy 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 STM is $20.32 which is 24.11% of its current price while HON has price target of 173.1 which is 14.24% 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.
STM currently has price to earning P/E ratio of 12.43 whereas HON has 26.07 while the forward P/E ratio for the prior stands at 11.26 and for the later it depicts the value of 18.56.
The price to Book P/B for STM is 2.48, Price to Sale is at 1.47 and for HON these ratios stand at 6.04 and 2.57.