The shares of Red Hat, Inc. (NYSE:RHT) and Xilinx, Inc. (NASDAQ:XLNX) were among the active stocks of the last trading sessions. Red Hat, Inc. (NYSE:RHT) soared to 0.01% closing at the price of $173.64 whereas the shares of Xilinx, Inc. (NASDAQ:XLNX) soared 1.86% with the increase of 1.58 points closing at the price of $86.68. Red Hat, Inc. has currently increase 0.68% in its stock over the period of 6-months while its rival Xilinx, Inc. added 25.26% 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 Red Hat, Inc. (NYSE:RHT) is 16.9% while the ROI of Xilinx, Inc. (NASDAQ:XLNX) is 18.2%. Another figure that is to be considered while analyzing the profitability of a share is its EBITDA margin, RHT’s EBITDA Margin is 33.71 whereas XLNX’s is 18.61.
Both the profitability ratios suggest a mixed sentiment for Red Hat, Inc. (NYSE:RHT) and Xilinx, Inc. (NASDAQ:XLNX).
EPS & Surprise Factor
Red Hat, Inc. (NYSE:RHT) reported $0.85/share EPS for the previous quarter where analysts were predicting an EPS to be $0.82/share Thus beating the analyst Estimates with a Surprise Factor of 3.7 Percent. While, Xilinx, Inc. (NASDAQ:XLNX) reported EPS of $0.84/share in the last quarter. The analysts projected EPS of $0.76/share depicting a Surprise of 10.5 Percent.
Taking a look at Earnings per Share, Xilinx, Inc. tends to be beating the analyst estimates more than Red Hat, Inc.. so XLNX is more profitable than RHT.
Technical Analysis of Red Hat, Inc. & Xilinx, Inc.
Moving average convergence divergence (MACD) shows that Red Hat, Inc. (NYSE:RHT) is on a PRICE RELATIVITY trend While Xilinx, Inc. (NASDAQ:XLNX) is on PRICE RELATIVITY trend. The trend for the past 10-days shows that the Red Hat, Inc. was in BULLISH territory and Xilinx, Inc. was in BULLISH territory.
RHT’s current statistics gauge that the stock candle is BULLISH with LOW volatility. While XLNX’s candle is BULLISH with HIGH.
EPS Growth Rate: RHT’s 16.3% versus XLNX’s 17.21%
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 Red Hat, Inc. (NYSE:RHT) is predicted at 16.3% while Xilinx, Inc. (NASDAQ:XLNX) stands at 17.21%. These numbers suggest that XLNX 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 RHT stands at 1.2 while XLNX is at 4.3 whereas the debt ratio of the prior is 0.4 while the debt ratio of the later is 0.7.
The values of the both ratios suggest that XLNX 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 2.4 for RHT and 2.4 for XLNX which means RHT has Hold rating whereas XLNX 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 RHT is $177.13 which is 1.97% of its current price while XLNX has price target of 85.55 which is -1.32% 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.
RHT currently has price to earning P/E ratio of 78.01 whereas XLNX has 27.17 while the forward P/E ratio for the prior stands at 43.63 and for the later it depicts the value of 24.63.
The price to Book P/B for RHT is 23.79, Price to Sale is at 9.69 and for XLNX these ratios stand at 8.97 and 8.2.