The shares of Arconic Inc. (NYSE:ARNC) and US Foods Holding Corp. (NYSE:USFD) were among the active stocks of the last trading sessions. Arconic Inc. (NYSE:ARNC) soared to 0.77% closing at the price of $20.92 whereas the shares of US Foods Holding Corp. (NYSE:USFD) soared 13% with the increase of 3.64 points closing at the price of $31.63. Arconic Inc. has currently increase 16.09% in its stock over the period of 6-months while its rival US Foods Holding Corp. subtracted -7.7% 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 Arconic Inc. (NYSE:ARNC) is 0.5% while the ROI of US Foods Holding Corp. (NYSE:USFD) is 6.6%. Another figure that is to be considered while analyzing the profitability of a share is its EBITDA margin, ARNC’s EBITDA Margin is 8.53 whereas USFD’s is 9.9.
Both the profitability ratios suggest that US Foods Holding Corp. (NYSE:USFD) is more suitable investment in terms of profitability and return.
EPS & Surprise Factor
Arconic Inc. (NYSE:ARNC) reported $0.32/share EPS for the previous quarter where analysts were predicting an EPS to be $0.3/share Thus beating the analyst Estimates with a Surprise Factor of 6.7 Percent. While, US Foods Holding Corp. (NYSE:USFD) reported EPS of $0.55/share in the last quarter. The analysts projected EPS of $0.51/share depicting a Surprise of 7.8 Percent.
Taking a look at Earnings per Share, US Foods Holding Corp. tends to be beating the analyst estimates more than Arconic Inc.. so USFD is more profitable than ARNC.
Technical Analysis of Arconic Inc. & US Foods Holding Corp.
Moving average convergence divergence (MACD) shows that Arconic Inc. (NYSE:ARNC) is on a PRICE RELATIVITY trend While US Foods Holding Corp. (NYSE:USFD) is on PRICE RELATIVITY trend. The trend for the past 10-days shows that the Arconic Inc. was in BULLISH territory and US Foods Holding Corp. was in BULLISH territory.
ARNC’s current statistics gauge that the stock candle is BULLISH with HIGH volatility. While USFD’s candle is BULLISH with HIGH.
EPS Growth Rate: ARNC’s 20% versus USFD’s 26.6%
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 Arconic Inc. (NYSE:ARNC) is predicted at 20% while US Foods Holding Corp. (NYSE:USFD) stands at 26.6%. These numbers suggest that USFD 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 ARNC stands at 2 while USFD is at 1.4 whereas the debt ratio of the prior is 1.2 while the debt ratio of the later is 1.24.
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 2.4 for ARNC and 2.1 for USFD which means ARNC has Hold rating whereas USFD 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 ARNC is $23.44 which is 10.75% of its current price while USFD has price target of 38.64 which is 18.14% 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.
ARNC currently has price to earning P/E ratio of 0 whereas USFD has 18.8 while the forward P/E ratio for the prior stands at 13.14 and for the later it depicts the value of 13.78.
The price to Book P/B for ARNC is 1.9, Price to Sale is at 0.74 and for USFD these ratios stand at 2.26 and 0.29.