The shares of Archer-Daniels-Midland Company (NYSE:ADM) and Chevron Corporation (NYSE:CVX) were among the active stocks of the last trading sessions. Archer-Daniels-Midland Company (NYSE:ADM) declined to -1.6% closing at the price of $47.33 whereas the shares of Chevron Corporation (NYSE:CVX) declined -0.03% with the decrease of -0.04 points closing at the price of $118.9. Archer-Daniels-Midland Company has currently increase 8.31% in its stock over the period of 6-months while its rival Chevron Corporation subtracted -7.63% 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 Archer-Daniels-Midland Company (NYSE:ADM) is 4.2% while the ROI of Chevron Corporation (NYSE:CVX) is 1.7%. Another figure that is to be considered while analyzing the profitability of a share is its EBITDA margin, ADM’s EBITDA Margin is 12.55 whereas CVX’s is 9.48.
Both the profitability ratios suggest that Archer-Daniels-Midland Company (NYSE:ADM) is more suitable investment in terms of profitability and return.
EPS & Surprise Factor
Archer-Daniels-Midland Company (NYSE:ADM) reported $0.92/share EPS for the previous quarter where analysts were predicting an EPS to be $0.83/share Thus beating the analyst Estimates with a Surprise Factor of 10.8 Percent. While, Chevron Corporation (NYSE:CVX) reported EPS of $2.11/share in the last quarter. The analysts projected EPS of $2.06/share depicting a Surprise of 2.4 Percent.
Taking a look at Earnings per Share, Archer-Daniels-Midland Company tends to be beating the analyst estimates more than Chevron Corporation. so ADM is more profitable than CVX.
Technical Analysis of Archer-Daniels-Midland Company & Chevron Corporation
Moving average convergence divergence (MACD) shows that Archer-Daniels-Midland Company (NYSE:ADM) is on a PRICE RELATIVITY trend While Chevron Corporation (NYSE:CVX) is on PRICE RELATIVITY trend. The trend for the past 10-days shows that the Archer-Daniels-Midland Company was in BULLISH territory and Chevron Corporation was in BULLISH territory.
ADM’s current statistics gauge that the stock candle is BEARISH with HIGH volatility. While CVX’s candle is BEARISH with HIGH.
EPS Growth Rate: ADM’s -8.8% versus CVX’s 57.35%
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 Archer-Daniels-Midland Company (NYSE:ADM) is predicted at -8.8% while Chevron Corporation (NYSE:CVX) stands at 57.35%. These numbers suggest that CVX 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 ADM stands at 1.6 while CVX is at 1.1 whereas the debt ratio of the prior is 0.41 while the debt ratio of the later is 0.25.
The values of the both ratios suggest that ADM is more suitable investment when the liquidity and risk is the main concern.
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 ADM and 2 for CVX which means ADM has Hold rating whereas CVX 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 ADM is $53.18 which is 11% of its current price while CVX has price target of 145.89 which is 18.5% 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.
ADM currently has price to earning P/E ratio of 15.75 whereas CVX has 22.52 while the forward P/E ratio for the prior stands at 13.05 and for the later it depicts the value of 12.29.
The price to Book P/B for ADM is 1.43, Price to Sale is at 0.42 and for CVX these ratios stand at 1.48 and 1.5.