Comparing Profitability of these two stocks: Western Digital Corporation (WDC), GoPro, Inc. (GPRO)

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The shares of Western Digital Corporation (NASDAQ:WDC) and GoPro, Inc. (NASDAQ:GPRO) were among the active stocks of the last trading sessions. Western Digital Corporation (NASDAQ:WDC) declined to -2% closing at the price of $47.56 whereas the shares of GoPro, Inc. (NASDAQ:GPRO) declined -4.87% with the decrease of -0.28 points closing at the price of $5.47. Western Digital Corporation has currently decrease -39.64% in its stock over the period of 6-months while its rival GoPro, Inc. subtracted -4.7% 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 Western Digital Corporation (NASDAQ:WDC) is 16.4% while the ROI of GoPro, Inc. (NASDAQ:GPRO) is -22.2%. Another figure that is to be considered while analyzing the profitability of a share is its EBITDA margin, WDC’s EBITDA Margin is 3.8 whereas GPRO’s is -10.37.

Both the profitability ratios suggest that Western Digital Corporation (NASDAQ:WDC) is more suitable investment in terms of profitability and return.

EPS & Surprise Factor

Western Digital Corporation (NASDAQ:WDC) reported $3.04/share EPS for the previous quarter where analysts were predicting an EPS to be $3.04/share Thus meeting the analyst Estimates with a Surprise Factor of 0 Percent. While, GoPro, Inc. (NASDAQ:GPRO) reported EPS of $-0.04/share in the last quarter. The analysts projected EPS of $-0.06/share depicting a Surprise of 33.3 Percent.

Taking a look at Earnings per Share, GoPro, Inc. tends to be beating the analyst estimates more than Western Digital Corporation. so GPRO is more profitable than WDC.

Technical Analysis of Western Digital Corporation & GoPro, Inc.

Moving average convergence divergence (MACD) shows that Western Digital Corporation (NASDAQ:WDC) is on a PRICE RELATIVITY trend While GoPro, Inc. (NASDAQ:GPRO) is on PRICE RELATIVITY trend. The trend for the past 10-days shows that the Western Digital Corporation was in BULLISH territory and GoPro, Inc. was in BEARISH territory.

WDC’s current statistics gauge that the stock candle is BEARISH with HIGH volatility. While GPRO’s candle is BEARISH with HIGH.

EPS Growth Rate: WDC’s -2.7% versus GPRO’s 10%

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 Western Digital Corporation (NASDAQ:WDC) is predicted at -2.7% while GoPro, Inc. (NASDAQ:GPRO) stands at 10%. These numbers suggest that GPRO 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 WDC stands at 2.4 while GPRO is at 1.5 whereas the debt ratio of the prior is 0.97 while the debt ratio of the later is 0.72.

The values of the both ratios suggest that WDC is more suitable investment when the liquidity and risk is the main concern.

Analyst Recommendations

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 2.3 for WDC and 3 for GPRO which means WDC has Hold rating whereas GPRO 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 WDC is $72.2 which is 34.13% of its current price while GPRO has price target of 6.58 which is 16.87% of its current price.

Valuation Ratios

Valuation is the process of determining the company’s worth for an investor, the valuation ratios give an insight to that worthiness.

WDC currently has price to earning P/E ratio of 7.35 whereas GPRO has 0 while the forward P/E ratio for the prior stands at 5.62 and for the later it depicts the value of 30.39.

The price to Book P/B for WDC is 1.24, Price to Sale is at 0.66 and for GPRO these ratios stand at 4.05 and 0.93.