The shares of Verizon Communications Inc. (NYSE:VZ) and Barrick Gold Corporation (NYSE:ABX) were among the active stocks of the last trading sessions. Verizon Communications Inc. (NYSE:VZ) soared to 1.08% closing at the price of $58.27 whereas the shares of Barrick Gold Corporation (NYSE:ABX) soared 0.92% with the increase of 0.12 points closing at the price of $13.1. Verizon Communications Inc. has currently increase 19.85% in its stock over the period of 6-months while its rival Barrick Gold Corporation subtracted -2.96% 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 Verizon Communications Inc. (NYSE:VZ) is 11.6% while the ROI of Barrick Gold Corporation (NYSE:ABX) is 11.1%. Another figure that is to be considered while analyzing the profitability of a share is its EBITDA margin, VZ’s EBITDA Margin is 7.51 whereas ABX’s is 6.12.
Both the profitability ratios suggest that Verizon Communications Inc. (NYSE:VZ) is more suitable investment in terms of profitability and return.
EPS & Surprise Factor
Verizon Communications Inc. (NYSE:VZ) reported $1.22/share EPS for the previous quarter where analysts were predicting an EPS to be $1.19/share Thus beating the analyst Estimates with a Surprise Factor of 2.5 Percent. While, Barrick Gold Corporation (NYSE:ABX) reported EPS of $0.08/share in the last quarter. The analysts projected EPS of $0.05/share depicting a Surprise of 60 Percent.
Taking a look at Earnings per Share, Barrick Gold Corporation tends to be beating the analyst estimates more than Verizon Communications Inc.. so ABX is more profitable than VZ.
Technical Analysis of Verizon Communications Inc. & Barrick Gold Corporation
Moving average convergence divergence (MACD) shows that Verizon Communications Inc. (NYSE:VZ) is on a PRICE RELATIVITY trend While Barrick Gold Corporation (NYSE:ABX) is on PRICE RELATIVITY trend. The trend for the past 10-days shows that the Verizon Communications Inc. was in BULLISH territory and Barrick Gold Corporation was in BULLISH territory.
VZ’s current statistics gauge that the stock candle is BULLISH with HIGH volatility. While ABX’s candle is BULLISH with MEDIUM.
EPS Growth Rate: VZ’s 5.9% versus ABX’s 0%
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 Verizon Communications Inc. (NYSE:VZ) is predicted at 5.9% while Barrick Gold Corporation (NYSE:ABX) stands at 0%. These numbers suggest that VZ 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 VZ stands at 1 while ABX is at 2.6 whereas the debt ratio of the prior is 2.07 while the debt ratio of the later is 0.64.
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 2.4 for VZ and 2.8 for ABX which means VZ has Hold rating whereas ABX 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 VZ is $57.87 which is -0.69% of its current price while ABX has price target of 13.82 which is 5.21% 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.
VZ currently has price to earning P/E ratio of 15.55 whereas ABX has 0 while the forward P/E ratio for the prior stands at 12.35 and for the later it depicts the value of 28.05.
The price to Book P/B for VZ is 4.42, Price to Sale is at 1.85 and for ABX these ratios stand at 1.72 and 2.05.