The shares of Cheniere Energy, Inc. (NYSE:LNG) and Southwest Airlines Company (NYSE:LUV) were among the active stocks of the last trading sessions. Cheniere Energy, Inc. (NYSE:LNG) soared to 2.74% closing at the price of $63.39 whereas the shares of Southwest Airlines Company (NYSE:LUV) declined -0.3% with the decrease of -0.16 points closing at the price of $52.72. Cheniere Energy, Inc. has currently increase 1.6% in its stock over the period of 6-months while its rival Southwest Airlines Company added 0.5% 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 Cheniere Energy, Inc. (NYSE:LNG) is 7.2% while the ROI of Southwest Airlines Company (NYSE:LUV) is 17.5%. Another figure that is to be considered while analyzing the profitability of a share is its EBITDA margin, LNG’s EBITDA Margin is 19.46 whereas LUV’s is 7.78.
Both the profitability ratios suggest a mixed sentiment for Cheniere Energy, Inc. (NYSE:LNG) and Southwest Airlines Company (NYSE:LUV).
EPS & Surprise Factor
Cheniere Energy, Inc. (NYSE:LNG) reported $0.26/share EPS for the previous quarter where analysts were predicting an EPS to be $0.21/share Thus beating the analyst Estimates with a Surprise Factor of 23.8 Percent. While, Southwest Airlines Company (NYSE:LUV) reported EPS of $1.08/share in the last quarter. The analysts projected EPS of $1.07/share depicting a Surprise of 0.9 Percent.
Taking a look at Earnings per Share, Cheniere Energy, Inc. tends to be beating the analyst estimates more than Southwest Airlines Company. so LNG is more profitable than LUV.
Technical Analysis of Cheniere Energy, Inc. & Southwest Airlines Company
Moving average convergence divergence (MACD) shows that Cheniere Energy, Inc. (NYSE:LNG) is on a PRICE RELATIVITY trend While Southwest Airlines Company (NYSE:LUV) is on PRICE RELATIVITY trend. The trend for the past 10-days shows that the Cheniere Energy, Inc. was in BULLISH territory and Southwest Airlines Company was in BULLISH territory.
LNG’s current statistics gauge that the stock candle is BULLISH with HIGH volatility. While LUV’s candle is BULLISH with HIGH.
EPS Growth Rate: LNG’s 43.18% versus LUV’s 15.53%
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 Cheniere Energy, Inc. (NYSE:LNG) is predicted at 43.18% while Southwest Airlines Company (NYSE:LUV) stands at 15.53%. These numbers suggest that LNG 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 LNG stands at 2.3 while LUV is at 0.7 whereas the debt ratio of the prior is 0 while the debt ratio of the later is 0.34.
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 1.6 for LNG and 2 for LUV which means LNG has Buy rating whereas LUV has Buy 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 LNG is $77.63 which is 18.34% of its current price while LUV has price target of 63.33 which is 16.75% 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.
LNG currently has price to earning P/E ratio of 25.94 whereas LUV has 13.38 while the forward P/E ratio for the prior stands at 19.34 and for the later it depicts the value of 11.31.
The price to Book P/B for LNG is 0, Price to Sale is at 2.35 and for LUV these ratios stand at 2.96 and 1.39.