The shares of Eaton Corporation, PLC (NYSE:ETN) and Plains All American Pipeline, L.P. (NYSE:PAA) were among the active stocks of the last trading sessions. Eaton Corporation, PLC (NYSE:ETN) soared to 2.07% closing at the price of $75.28 whereas the shares of Plains All American Pipeline, L.P. (NYSE:PAA) soared 1.72% with the increase of 0.4 points closing at the price of $23.71. Eaton Corporation, PLC has currently decrease -0.5% in its stock over the period of 6-months while its rival Plains All American Pipeline, L.P. subtracted -2.47% 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 Eaton Corporation, PLC (NYSE:ETN) is 8.4% while the ROI of Plains All American Pipeline, L.P. (NYSE:PAA) is 10.4%. Another figure that is to be considered while analyzing the profitability of a share is its EBITDA margin, ETN’s EBITDA Margin is 10.7 whereas PAA’s is 20.04.
Both the profitability ratios suggest that Plains All American Pipeline, L.P. (NYSE:PAA) is more suitable investment in terms of profitability and return.
EPS & Surprise Factor
Eaton Corporation, PLC (NYSE:ETN) reported $1.43/share EPS for the previous quarter where analysts were predicting an EPS to be $1.43/share Thus meeting the analyst Estimates with a Surprise Factor of 0 Percent. While, Plains All American Pipeline, L.P. (NYSE:PAA) reported EPS of $0.07/share in the last quarter. The analysts projected EPS of $0.22/share depicting a Surprise of -68.2 Percent.
Taking a look at Earnings per Share, Eaton Corporation, PLC tends to be beating the analyst estimates more than Plains All American Pipeline, L.P.. so ETN is more profitable than PAA.
Technical Analysis of Eaton Corporation, PLC & Plains All American Pipeline, L.P.
Moving average convergence divergence (MACD) shows that Eaton Corporation, PLC (NYSE:ETN) is on a PRICE RELATIVITY trend While Plains All American Pipeline, L.P. (NYSE:PAA) is on PRICE RELATIVITY trend. The trend for the past 10-days shows that the Eaton Corporation, PLC was in BULLISH territory and Plains All American Pipeline, L.P. was in BULLISH territory.
ETN’s current statistics gauge that the stock candle is BULLISH with HIGH volatility. While PAA’s candle is BULLISH with HIGH.
EPS Growth Rate: ETN’s 9.43% versus PAA’s 20.22%
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 Eaton Corporation, PLC (NYSE:ETN) is predicted at 9.43% while Plains All American Pipeline, L.P. (NYSE:PAA) stands at 20.22%. These numbers suggest that PAA 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 ETN stands at 1.5 while PAA is at 0.8 whereas the debt ratio of the prior is 0.43 while the debt ratio of the later is 1.16.
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 2.2 for ETN and 2.3 for PAA which means ETN has Hold rating whereas PAA 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 ETN is $88.11 which is 14.56% of its current price while PAA has price target of 28.13 which is 15.71% 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.
ETN currently has price to earning P/E ratio of 15.83 whereas PAA has 13.9 while the forward P/E ratio for the prior stands at 12.77 and for the later it depicts the value of 11.76.
The price to Book P/B for ETN is 1.95, Price to Sale is at 1.54 and for PAA these ratios stand at 2.01 and 0.59.