The shares of Lowe’s Companies, Inc. (NYSE:LOW) and Maxim Integrated Products, Inc. (NASDAQ:MXIM) were among the active stocks of the last trading sessions. Lowe’s Companies, Inc. (NYSE:LOW) soared to 0.45% closing at the price of $97.51 whereas the shares of Maxim Integrated Products, Inc. (NASDAQ:MXIM) soared 0.53% with the increase of 0.27 points closing at the price of $51.68. Lowe’s Companies, Inc. has currently increase 15.51% in its stock over the period of 6-months while its rival Maxim Integrated Products, Inc. subtracted -9.86% 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 Lowe’s Companies, Inc. (NYSE:LOW) is 17.9% while the ROI of Maxim Integrated Products, Inc. (NASDAQ:MXIM) is 21.2%. Another figure that is to be considered while analyzing the profitability of a share is its EBITDA margin, LOW’s EBITDA Margin is 11.54 whereas MXIM’s is 13.13.
Both the profitability ratios suggest that Maxim Integrated Products, Inc. (NASDAQ:MXIM) is more suitable investment in terms of profitability and return.
EPS & Surprise Factor
Lowe’s Companies, Inc. (NYSE:LOW) reported $2.07/share EPS for the previous quarter where analysts were predicting an EPS to be $2.02/share Thus beating the analyst Estimates with a Surprise Factor of 2.5 Percent. While, Maxim Integrated Products, Inc. (NASDAQ:MXIM) reported EPS of $0.75/share in the last quarter. The analysts projected EPS of $0.75/share depicting a Surprise of 0 Percent.
Taking a look at Earnings per Share, Lowe’s Companies, Inc. tends to be beating the analyst estimates more than Maxim Integrated Products, Inc.. so LOW is more profitable than MXIM.
Technical Analysis of Lowe’s Companies, Inc. & Maxim Integrated Products, Inc.
Moving average convergence divergence (MACD) shows that Lowe’s Companies, Inc. (NYSE:LOW) is on a PRICE RELATIVITY trend While Maxim Integrated Products, Inc. (NASDAQ:MXIM) is on PRICE RELATIVITY trend. The trend for the past 10-days shows that the Lowe’s Companies, Inc. was in BULLISH territory and Maxim Integrated Products, Inc. was in BULLISH territory.
LOW’s current statistics gauge that the stock candle is BEARISH with HIGH volatility. While MXIM’s candle is BULLISH with HIGH.
EPS Growth Rate: LOW’s 15.2% versus MXIM’s 13.6%
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 Lowe’s Companies, Inc. (NYSE:LOW) is predicted at 15.2% while Maxim Integrated Products, Inc. (NASDAQ:MXIM) stands at 13.6%. These numbers suggest that LOW 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 LOW stands at 1.1 while MXIM is at 3.6 whereas the debt ratio of the prior is 2.74 while the debt ratio of the later is 0.78.
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 1.8 for LOW and 2.7 for MXIM which means LOW has Buy rating whereas MXIM 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 LOW is $120.37 which is 18.99% of its current price while MXIM has price target of 55.7 which is 7.22% 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.
LOW currently has price to earning P/E ratio of 20.35 whereas MXIM has 19.26 while the forward P/E ratio for the prior stands at 16.25 and for the later it depicts the value of 17.39.
The price to Book P/B for LOW is 13.71, Price to Sale is at 1.12 and for MXIM these ratios stand at 7.51 and 5.78.