The shares of Darden Restaurants, Inc. (NYSE:DRI) and Ultrapar Participacoes S.A. (NYSE:UGP) were among the active stocks of the last trading sessions. Darden Restaurants, Inc. (NYSE:DRI) soared to 0.52% closing at the price of $111.22 whereas the shares of Ultrapar Participacoes S.A. (NYSE:UGP) soared 3.28% with the increase of 0.37 points closing at the price of $11.64. Darden Restaurants, Inc. has currently increase 21.76% in its stock over the period of 6-months while its rival Ultrapar Participacoes S.A. subtracted -22.71% 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 Darden Restaurants, Inc. (NYSE:DRI) is 22% while the ROI of Ultrapar Participacoes S.A. (NYSE:UGP) is 9%. Another figure that is to be considered while analyzing the profitability of a share is its EBITDA margin, DRI’s EBITDA Margin is 12.79 whereas UGP’s is 8.38.
Both the profitability ratios suggest that Darden Restaurants, Inc. (NYSE:DRI) is more suitable investment in terms of profitability and return.
EPS & Surprise Factor
Darden Restaurants, Inc. (NYSE:DRI) reported $1.34/share EPS for the previous quarter where analysts were predicting an EPS to be $1.24/share Thus beating the analyst Estimates with a Surprise Factor of 8.1 Percent. While, Ultrapar Participacoes S.A. (NYSE:UGP) reported EPS of $0.04/share in the last quarter. The analysts projected EPS of $0.07/share depicting a Surprise of -42.9 Percent.
Taking a look at Earnings per Share, Darden Restaurants, Inc. tends to be beating the analyst estimates more than Ultrapar Participacoes S.A.. so DRI is more profitable than UGP.
Technical Analysis of Darden Restaurants, Inc. & Ultrapar Participacoes S.A.
Moving average convergence divergence (MACD) shows that Darden Restaurants, Inc. (NYSE:DRI) is on a PRICE RELATIVITY trend While Ultrapar Participacoes S.A. (NYSE:UGP) is on PRICE RELATIVITY trend. The trend for the past 10-days shows that the Darden Restaurants, Inc. was in BULLISH territory and Ultrapar Participacoes S.A. was in BULLISH territory.
DRI’s current statistics gauge that the stock candle is BULLISH with HIGH volatility. While UGP’s candle is NEUTRAL with LOW.
EPS Growth Rate: DRI’s 13.2% versus UGP’s -1.4%
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 Darden Restaurants, Inc. (NYSE:DRI) is predicted at 13.2% while Ultrapar Participacoes S.A. (NYSE:UGP) stands at -1.4%. These numbers suggest that DRI 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 DRI stands at 0.4 while UGP is at 2.3 whereas the debt ratio of the prior is 0 while the debt ratio of the later is 1.63.
The values of the both ratios suggest that UGP 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 DRI and 2.8 for UGP which means DRI has Hold rating whereas UGP 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 DRI is $123.95 which is 10.27% of its current price while UGP has price target of 17.2 which is 32.33% 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.
DRI currently has price to earning P/E ratio of 24.44 whereas UGP has 18.42 while the forward P/E ratio for the prior stands at 17.83 and for the later it depicts the value of 16.51.
The price to Book P/B for DRI is 6.05, Price to Sale is at 1.68 and for UGP these ratios stand at 2.53 and 0.28.