The shares of US Foods Holding Corp. (NYSE:USFD) and Mallinckrodt plc (NYSE:MNK) were among the active stocks of the last trading sessions. US Foods Holding Corp. (NYSE:USFD) soared to 0.16% closing at the price of $31.8 whereas the shares of Mallinckrodt plc (NYSE:MNK) soared 1.33% with the increase of 0.41 points closing at the price of $31.17. US Foods Holding Corp. has currently decrease -6.69% in its stock over the period of 6-months while its rival Mallinckrodt plc added 109.34% 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 US Foods Holding Corp. (NYSE:USFD) is 6.6% while the ROI of Mallinckrodt plc (NYSE:MNK) is 12.6%. Another figure that is to be considered while analyzing the profitability of a share is its EBITDA margin, USFD’s EBITDA Margin is 9.9 whereas MNK’s is 6.09.
Both the profitability ratios suggest a mixed sentiment for US Foods Holding Corp. (NYSE:USFD) and Mallinckrodt plc (NYSE:MNK).
EPS & Surprise Factor
US Foods Holding Corp. (NYSE:USFD) reported $0.55/share EPS for the previous quarter where analysts were predicting an EPS to be $0.51/share Thus beating the analyst Estimates with a Surprise Factor of 7.8 Percent. While, Mallinckrodt plc (NYSE:MNK) reported EPS of $2.1/share in the last quarter. The analysts projected EPS of $1.79/share depicting a Surprise of 17.3 Percent.
Taking a look at Earnings per Share, Mallinckrodt plc tends to be beating the analyst estimates more than US Foods Holding Corp.. so MNK is more profitable than USFD.
Technical Analysis of US Foods Holding Corp. & Mallinckrodt plc
Moving average convergence divergence (MACD) shows that US Foods Holding Corp. (NYSE:USFD) is on a PRICE RELATIVITY trend While Mallinckrodt plc (NYSE:MNK) is on PRICE RELATIVITY trend. The trend for the past 10-days shows that the US Foods Holding Corp. was in BULLISH territory and Mallinckrodt plc was in BULLISH territory.
USFD’s current statistics gauge that the stock candle is BULLISH with HIGH volatility. While MNK’s candle is BULLISH with HIGH.
EPS Growth Rate: USFD’s 26.6% versus MNK’s 9.17%
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 US Foods Holding Corp. (NYSE:USFD) is predicted at 26.6% while Mallinckrodt plc (NYSE:MNK) stands at 9.17%. These numbers suggest that USFD 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 USFD stands at 1.4 while MNK is at 2.3 whereas the debt ratio of the prior is 1.24 while the debt ratio of the later is 0.98.
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 2.1 for USFD and 2.9 for MNK which means USFD has Hold rating whereas MNK 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 USFD is $38.64 which is 17.7% of its current price while MNK has price target of 30.69 which is -1.56% 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.
USFD currently has price to earning P/E ratio of 18.91 whereas MNK has 2.54 while the forward P/E ratio for the prior stands at 13.85 and for the later it depicts the value of 4.15.
The price to Book P/B for USFD is 2.27, Price to Sale is at 0.29 and for MNK these ratios stand at 0.4 and 0.93.