The shares of Albemarle Corporation (NYSE:ALB) and Novartis AG (NYSE:NVS) were among the active stocks of the last trading sessions. Albemarle Corporation (NYSE:ALB) declined to -1.96% closing at the price of $105.87 whereas the shares of Novartis AG (NYSE:NVS) soared 0.38% with the increase of 0.34 points closing at the price of $89.24. Albemarle Corporation has currently increase 7.44% in its stock over the period of 6-months while its rival Novartis AG added 15.07% 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 Albemarle Corporation (NYSE:ALB) is 10.4% while the ROI of Novartis AG (NYSE:NVS) is 7.1%. Another figure that is to be considered while analyzing the profitability of a share is its EBITDA margin, ALB’s EBITDA Margin is 12.02 whereas NVS’s is 13.61.
Both the profitability ratios suggest a mixed sentiment for Albemarle Corporation (NYSE:ALB) and Novartis AG (NYSE:NVS).
EPS & Surprise Factor
Albemarle Corporation (NYSE:ALB) reported $1.31/share EPS for the previous quarter where analysts were predicting an EPS to be $1.25/share Thus beating the analyst Estimates with a Surprise Factor of 4.8 Percent. While, Novartis AG (NYSE:NVS) reported EPS of $1.32/share in the last quarter. The analysts projected EPS of $1.3/share depicting a Surprise of 1.5 Percent.
Taking a look at Earnings per Share, Albemarle Corporation tends to be beating the analyst estimates more than Novartis AG. so ALB is more profitable than NVS.
Technical Analysis of Albemarle Corporation & Novartis AG
Moving average convergence divergence (MACD) shows that Albemarle Corporation (NYSE:ALB) is on a PRICE RELATIVITY trend While Novartis AG (NYSE:NVS) is on PRICE RELATIVITY trend. The trend for the past 10-days shows that the Albemarle Corporation was in BULLISH territory and Novartis AG was in BULLISH territory.
ALB’s current statistics gauge that the stock candle is BULLISH with HIGH volatility. While NVS’s candle is BULLISH with MEDIUM.
EPS Growth Rate: ALB’s 12.7% versus NVS’s 6.91%
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 Albemarle Corporation (NYSE:ALB) is predicted at 12.7% while Novartis AG (NYSE:NVS) stands at 6.91%. These numbers suggest that ALB 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 ALB stands at 2.2 while NVS is at 1.2 whereas the debt ratio of the prior is 0.44 while the debt ratio of the later is 0.41.
The values of the both ratios suggest that ALB 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 for ALB and 1 for NVS which means ALB has Buy rating whereas NVS has Strong 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 ALB is $126.3 which is 16.18% of its current price while NVS has price target of 98.5 which is 9.4% 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.
ALB currently has price to earning P/E ratio of 15.72 whereas NVS has 15.71 while the forward P/E ratio for the prior stands at 17.39 and for the later it depicts the value of 16.25.
The price to Book P/B for ALB is 3.14, Price to Sale is at 3.53 and for NVS these ratios stand at 2.65 and 4.33.