Which Company’s Stock is more Profitable? Gogo Inc. (GOGO) or Verizon Communications Inc. (VZ)

The shares of Gogo Inc. (NASDAQ:GOGO) and Verizon Communications Inc. (NYSE:VZ) were among the active stocks of the last trading sessions. Gogo Inc. (NASDAQ:GOGO) soared to 26.25% closing at the price of $7.31 whereas the shares of Verizon Communications Inc. (NYSE:VZ) soared 0% with the increase of 0 points closing at the price of $57.21. Gogo Inc. has currently increase 37.41% in its stock over the period of 6-months while its rival Verizon Communications Inc. added 23.35% 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 Gogo Inc. (NASDAQ:GOGO) is -7.3% while the ROI of Verizon Communications Inc. (NYSE:VZ) is 11.6%. Another figure that is to be considered while analyzing the profitability of a share is its EBITDA margin, GOGO’s EBITDA Margin is 11.5 whereas VZ’s is 7.51.

Both the profitability ratios suggest a mixed sentiment for Gogo Inc. (NASDAQ:GOGO) and Verizon Communications Inc. (NYSE:VZ).

EPS & Surprise Factor

Gogo Inc. (NASDAQ:GOGO) reported $-0.47/share EPS for the previous quarter where analysts were predicting an EPS to be $-0.72/share Thus beating the analyst Estimates with a Surprise Factor of 34.7 Percent. While, Verizon Communications Inc. (NYSE:VZ) reported EPS of $1.22/share in the last quarter. The analysts projected EPS of $1.19/share depicting a Surprise of 2.5 Percent.

Taking a look at Earnings per Share, Gogo Inc. tends to be beating the analyst estimates more than Verizon Communications Inc.. so GOGO is more profitable than VZ.

Technical Analysis of Gogo Inc. & Verizon Communications Inc.

Moving average convergence divergence (MACD) shows that Gogo Inc. (NASDAQ:GOGO) is on a PRICE RELATIVITY trend While Verizon Communications Inc. (NYSE:VZ) is on PRICE RELATIVITY trend. The trend for the past 10-days shows that the Gogo Inc. was in BULLISH territory and Verizon Communications Inc. was in BULLISH territory.

GOGO’s current statistics gauge that the stock candle is BULLISH with HIGH volatility. While VZ’s candle is BEARISH with HIGH.

EPS Growth Rate: GOGO’s 10% versus VZ’s 5.9%

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 Gogo Inc. (NASDAQ:GOGO) is predicted at 10% while Verizon Communications Inc. (NYSE:VZ) stands at 5.9%. These numbers suggest that GOGO 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 GOGO stands at 2 while VZ is at 1 whereas the debt ratio of the prior is 0 while the debt ratio of the later is 2.07.

The values of the both ratios suggest that one is more liquid and other investment is more risk free.

Analyst Recommendations

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 3.3 for GOGO and 2.4 for VZ which means GOGO has Sell rating whereas VZ 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 GOGO is $6.83 which is -7.03% of its current price while VZ has price target of 57.87 which is 1.14% of its current price.

Valuation Ratios

Valuation is the process of determining the company’s worth for an investor, the valuation ratios give an insight to that worthiness.

GOGO currently has price to earning P/E ratio of 0 whereas VZ has 15.26 while the forward P/E ratio for the prior stands at 0 and for the later it depicts the value of 12.12.

The price to Book P/B for GOGO is 0, Price to Sale is at 0.77 and for VZ these ratios stand at 4.34 and 1.81.