The shares of NRG Energy, Inc. (NYSE:NRG) and Kosmos Energy Ltd. (NYSE:KOS) were among the active stocks of the last trading sessions. NRG Energy, Inc. (NYSE:NRG) declined to -0.91% closing at the price of $37.95 whereas the shares of Kosmos Energy Ltd. (NYSE:KOS) declined -5.72% with the decrease of -0.36 points closing at the price of $5.93. NRG Energy, Inc. has currently increase 10.87% in its stock over the period of 6-months while its rival Kosmos Energy Ltd. subtracted -15.77% 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 NRG Energy, Inc. (NYSE:NRG) is 7.3% while the ROI of Kosmos Energy Ltd. (NYSE:KOS) is -5.7%. Another figure that is to be considered while analyzing the profitability of a share is its EBITDA margin, NRG’s EBITDA Margin is 10.33 whereas KOS’s is -45.74.
Both the profitability ratios suggest that NRG Energy, Inc. (NYSE:NRG) is more suitable investment in terms of profitability and return.
EPS & Surprise Factor
NRG Energy, Inc. (NYSE:NRG) reported $0.19/share EPS for the previous quarter where analysts were predicting an EPS to be $0.79/share Thus lagging the analyst Estimates with a Surprise Factor of -75.9 Percent. While, Kosmos Energy Ltd. (NYSE:KOS) reported EPS of $-0.23/share in the last quarter. The analysts projected EPS of $-0.23/share depicting a Surprise of 0 Percent.
Taking a look at Earnings per Share, Kosmos Energy Ltd. tends to be beating the analyst estimates more than NRG Energy, Inc.. so KOS is more profitable than NRG.
Technical Analysis of NRG Energy, Inc. & Kosmos Energy Ltd.
Moving average convergence divergence (MACD) shows that NRG Energy, Inc. (NYSE:NRG) is on a PRICE RELATIVITY trend While Kosmos Energy Ltd. (NYSE:KOS) is on PRICE RELATIVITY trend. The trend for the past 10-days shows that the NRG Energy, Inc. was in BULLISH territory and Kosmos Energy Ltd. was in BEARISH territory.
NRG’s current statistics gauge that the stock candle is BEARISH with HIGH volatility. While KOS’s candle is BEARISH with HIGH.
EPS Growth Rate: NRG’s 78.07% versus KOS’s 23.8%
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 NRG Energy, Inc. (NYSE:NRG) is predicted at 78.07% while Kosmos Energy Ltd. (NYSE:KOS) stands at 23.8%. These numbers suggest that NRG 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 NRG stands at 1.3 while KOS is at 1 whereas the debt ratio of the prior is 0 while the debt ratio of the later is 1.57.
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 1.7 for NRG and 1.9 for KOS which means NRG has Buy rating whereas KOS 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 NRG is $41.72 which is 9.04% of its current price while KOS has price target of 10.28 which is 42.32% 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.
NRG currently has price to earning P/E ratio of 13.02 whereas KOS has 0 while the forward P/E ratio for the prior stands at 8.51 and for the later it depicts the value of 13.82.
The price to Book P/B for NRG is 0, Price to Sale is at 1.08 and for KOS these ratios stand at 3.15 and 3.61.