The shares of Manulife Financial Corp (NYSE:MFC) and CIT Group Inc (DEL) (NYSE:CIT) were among the active stocks of the last trading sessions. Manulife Financial Corp (NYSE:MFC) soared to 3.79% closing at the price of $16.98 whereas the shares of CIT Group Inc (DEL) (NYSE:CIT) declined -0.53% with the decrease of -0.25 points closing at the price of $47.12. Manulife Financial Corp has currently decrease -12.61% in its stock over the period of 6-months while its rival CIT Group Inc (DEL) subtracted -12.19% 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 Manulife Financial Corp (NYSE:MFC) is 7.6% while the ROI of CIT Group Inc (DEL) (NYSE:CIT) is 8.6%. Another figure that is to be considered while analyzing the profitability of a share is its EBITDA margin, MFC’s EBITDA Margin is 9.31 whereas CIT’s is NOT AVAILABLE.
Both the profitability ratios suggest that CIT Group Inc (DEL) (NYSE:CIT) is more suitable investment in terms of profitability and return.
EPS & Surprise Factor
Manulife Financial Corp (NYSE:MFC) reported $0.48/share EPS for the previous quarter where analysts were predicting an EPS to be $0.46/share Thus beating the analyst Estimates with a Surprise Factor of 4.3 Percent. While, CIT Group Inc (DEL) (NYSE:CIT) reported EPS of $1.15/share in the last quarter. The analysts projected EPS of $1.14/share depicting a Surprise of 0.9 Percent.
Taking a look at Earnings per Share, Manulife Financial Corp tends to be beating the analyst estimates more than CIT Group Inc (DEL). so MFC is more profitable than CIT.
Technical Analysis of Manulife Financial Corp & CIT Group Inc (DEL)
Moving average convergence divergence (MACD) shows that Manulife Financial Corp (NYSE:MFC) is on a PRICE RELATIVITY trend While CIT Group Inc (DEL) (NYSE:CIT) is on PRICE RELATIVITY trend. The trend for the past 10-days shows that the Manulife Financial Corp was in BULLISH territory and CIT Group Inc (DEL) was in BULLISH territory.
MFC’s current statistics gauge that the stock candle is BEARISH with HIGH volatility. While CIT’s candle is BEARISH with HIGH.
EPS Growth Rate: MFC’s 8.82% versus CIT’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 Manulife Financial Corp (NYSE:MFC) is predicted at 8.82% while CIT Group Inc (DEL) (NYSE:CIT) stands at 10%. These numbers suggest that CIT 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 MFC stands at 0 while CIT is at 0 whereas the debt ratio of the prior is 0.33 while the debt ratio of the later is 0.
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 1.5 for MFC and 2.2 for CIT which means MFC has Buy rating whereas CIT 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 MFC is $23.61 which is 28.08% of its current price while CIT has price target of 55.46 which is 15.04% 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.
MFC currently has price to earning P/E ratio of 18.12 whereas CIT has 20.42 while the forward P/E ratio for the prior stands at 5.94 and for the later it depicts the value of 9.83.
The price to Book P/B for MFC is 1.09, Price to Sale is at 0.87 and for CIT these ratios stand at 0.94 and 2.92.