The shares of Houghton Mifflin Harcourt Company (NASDAQ:HMHC) and MFA Financial, Inc. (NYSE:MFA) were among the active stocks of the last trading sessions. Houghton Mifflin Harcourt Company (NASDAQ:HMHC) soared to 22.58% closing at the price of $8.47 whereas the shares of MFA Financial, Inc. (NYSE:MFA) declined -0.42% with the decrease of -0.03 points closing at the price of $7.08. Houghton Mifflin Harcourt Company has currently increase 24.56% in its stock over the period of 6-months while its rival MFA Financial, Inc. subtracted -7.45% 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 Houghton Mifflin Harcourt Company (NASDAQ:HMHC) is -8.6% while the ROI of MFA Financial, Inc. (NYSE:MFA) is 3.2%. Another figure that is to be considered while analyzing the profitability of a share is its EBITDA margin, HMHC’s EBITDA Margin is 20.31 whereas MFA’s is NOT AVAILABLE.
Both the profitability ratios suggest that MFA Financial, Inc. (NYSE:MFA) is more suitable investment in terms of profitability and return.
EPS & Surprise Factor
Houghton Mifflin Harcourt Company (NASDAQ:HMHC) reported $0.7/share EPS for the previous quarter where analysts were predicting an EPS to be $0.59/share Thus beating the analyst Estimates with a Surprise Factor of 18.6 Percent. While, MFA Financial, Inc. (NYSE:MFA) reported EPS of $0.19/share in the last quarter. The analysts projected EPS of $0.18/share depicting a Surprise of 5.6 Percent.
Taking a look at Earnings per Share, Houghton Mifflin Harcourt Company tends to be beating the analyst estimates more than MFA Financial, Inc.. so HMHC is more profitable than MFA.
Technical Analysis of Houghton Mifflin Harcourt Company & MFA Financial, Inc.
Moving average convergence divergence (MACD) shows that Houghton Mifflin Harcourt Company (NASDAQ:HMHC) is on a PRICE RELATIVITY trend While MFA Financial, Inc. (NYSE:MFA) is on PRICE RELATIVITY trend. The trend for the past 10-days shows that the Houghton Mifflin Harcourt Company was in BULLISH territory and MFA Financial, Inc. was in BULLISH territory.
HMHC’s current statistics gauge that the stock candle is BULLISH with HIGH volatility. While MFA’s candle is BEARISH with HIGH.
EPS Growth Rate: HMHC’s 5% versus MFA’s 2.17%
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 Houghton Mifflin Harcourt Company (NASDAQ:HMHC) is predicted at 5% while MFA Financial, Inc. (NYSE:MFA) stands at 2.17%. These numbers suggest that HMHC 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 HMHC stands at 1.1 while MFA is at 0 whereas the debt ratio of the prior is 1.11 while the debt ratio of the later is 1.84.
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 HMHC and 2.9 for MFA which means HMHC has Hold rating whereas MFA 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 HMHC is $9.3 which is 8.92% of its current price while MFA has price target of 7.6 which is 6.84% 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.
HMHC currently has price to earning P/E ratio of 0 whereas MFA has 9.34 while the forward P/E ratio for the prior stands at 0 and for the later it depicts the value of 9.65.
The price to Book P/B for HMHC is 1.42, Price to Sale is at 0.75 and for MFA these ratios stand at 0.88 and 4.78.