The shares of DXC Technology Company (NYSE:DXC) and 2U, Inc. (NASDAQ:TWOU) were among the active stocks of the last trading sessions. DXC Technology Company (NYSE:DXC) soared to 0.56% closing at the price of $72.21 whereas the shares of 2U, Inc. (NASDAQ:TWOU) declined -15.58% with the decrease of -9.86 points closing at the price of $53.42. DXC Technology Company has currently decrease -19.29% in its stock over the period of 6-months while its rival 2U, Inc. subtracted -42.36% 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 DXC Technology Company (NYSE:DXC) is 9.8% while the ROI of 2U, Inc. (NASDAQ:TWOU) is -7%. Another figure that is to be considered while analyzing the profitability of a share is its EBITDA margin, DXC’s EBITDA Margin is 5.43 whereas TWOU’s is -119.08.
Both the profitability ratios suggest that DXC Technology Company (NYSE:DXC) is more suitable investment in terms of profitability and return.
EPS & Surprise Factor
DXC Technology Company (NYSE:DXC) reported $1.93/share EPS for the previous quarter where analysts were predicting an EPS to be $1.75/share Thus beating the analyst Estimates with a Surprise Factor of 10.3 Percent. While, 2U, Inc. (NASDAQ:TWOU) reported EPS of $-0.01/share in the last quarter. The analysts projected EPS of $-0.03/share depicting a Surprise of 66.7 Percent.
Taking a look at Earnings per Share, 2U, Inc. tends to be beating the analyst estimates more than DXC Technology Company. so TWOU is more profitable than DXC.
Technical Analysis of DXC Technology Company & 2U, Inc.
Moving average convergence divergence (MACD) shows that DXC Technology Company (NYSE:DXC) is on a PRICE RELATIVITY trend While 2U, Inc. (NASDAQ:TWOU) is on PRICE RELATIVITY trend. The trend for the past 10-days shows that the DXC Technology Company was in BEARISH territory and 2U, Inc. was in BEARISH territory.
DXC’s current statistics gauge that the stock candle is BULLISH with HIGH volatility. While TWOU’s candle is BEARISH with HIGH.
EPS Growth Rate: DXC’s 6.5% versus TWOU’s 25%
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 DXC Technology Company (NYSE:DXC) is predicted at 6.5% while 2U, Inc. (NASDAQ:TWOU) stands at 25%. These numbers suggest that TWOU 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 DXC stands at 0.9 while TWOU is at 5.7 whereas the debt ratio of the prior is 0.61 while the debt ratio of the later is 0.04.
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 DXC and 1.6 for TWOU which means DXC has Hold rating whereas TWOU 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 DXC is $102.44 which is 29.51% of its current price while TWOU has price target of 96.86 which is 44.85% 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.
DXC currently has price to earning P/E ratio of 11.38 whereas TWOU has 0 while the forward P/E ratio for the prior stands at 7.94 and for the later it depicts the value of 0.
The price to Book P/B for DXC is 1.79, Price to Sale is at 0.86 and for TWOU these ratios stand at 4.24 and 8.9.