The shares of Mallinckrodt plc (NYSE:MNK) and Applied Materials, Inc. (NASDAQ:AMAT) were among the active stocks of the last trading sessions. Mallinckrodt plc (NYSE:MNK) soared to 9.13% closing at the price of $29.64 whereas the shares of Applied Materials, Inc. (NASDAQ:AMAT) soared 1.6% with the increase of 0.55 points closing at the price of $34.87. Mallinckrodt plc has currently increase 116.03% in its stock over the period of 6-months while its rival Applied Materials, Inc. subtracted -35.58% 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 Mallinckrodt plc (NYSE:MNK) is 12.6% while the ROI of Applied Materials, Inc. (NASDAQ:AMAT) is 24.4%. Another figure that is to be considered while analyzing the profitability of a share is its EBITDA margin, MNK’s EBITDA Margin is 6.09 whereas AMAT’s is 6.44.
Both the profitability ratios suggest that Applied Materials, Inc. (NASDAQ:AMAT) is more suitable investment in terms of profitability and return.
EPS & Surprise Factor
Mallinckrodt plc (NYSE:MNK) reported $2.1/share EPS for the previous quarter where analysts were predicting an EPS to be $1.79/share Thus beating the analyst Estimates with a Surprise Factor of 17.3 Percent. While, Applied Materials, Inc. (NASDAQ:AMAT) reported EPS of $1.2/share in the last quarter. The analysts projected EPS of $1.17/share depicting a Surprise of 2.6 Percent.
Taking a look at Earnings per Share, Mallinckrodt plc tends to be beating the analyst estimates more than Applied Materials, Inc.. so MNK is more profitable than AMAT.
Technical Analysis of Mallinckrodt plc & Applied Materials, Inc.
Moving average convergence divergence (MACD) shows that Mallinckrodt plc (NYSE:MNK) is on a PRICE RELATIVITY trend While Applied Materials, Inc. (NASDAQ:AMAT) is on PRICE RELATIVITY trend. The trend for the past 10-days shows that the Mallinckrodt plc was in BULLISH territory and Applied Materials, Inc. was in BULLISH territory.
MNK’s current statistics gauge that the stock candle is BULLISH with HIGH volatility. While AMAT’s candle is BULLISH with HIGH.
EPS Growth Rate: MNK’s 9.17% versus AMAT’s 13.45%
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 Mallinckrodt plc (NYSE:MNK) is predicted at 9.17% while Applied Materials, Inc. (NASDAQ:AMAT) stands at 13.45%. These numbers suggest that AMAT 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 MNK stands at 2.3 while AMAT is at 2.5 whereas the debt ratio of the prior is 0.98 while the debt ratio of the later is 0.
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 2.9 for MNK and 2 for AMAT which means MNK has Hold rating whereas AMAT 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 MNK is $30.69 which is 3.42% of its current price while AMAT has price target of 54.91 which is 36.5% 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.
MNK currently has price to earning P/E ratio of 2.41 whereas AMAT has 8.09 while the forward P/E ratio for the prior stands at 3.95 and for the later it depicts the value of 8.53.
The price to Book P/B for MNK is 0.38, Price to Sale is at 0.89 and for AMAT these ratios stand at 5.08 and 2.