The shares of Cimarex Energy Co (NYSE:XEC) and GlaxoSmithKline PLC (NYSE:GSK) were among the active stocks of the last trading sessions. Cimarex Energy Co (NYSE:XEC) declined to -2.77% closing at the price of $90.61 whereas the shares of GlaxoSmithKline PLC (NYSE:GSK) soared 1.05% with the increase of 0.43 points closing at the price of $41.24. Cimarex Energy Co has currently decrease -8.05% in its stock over the period of 6-months while its rival GlaxoSmithKline PLC added 3.02% 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 Cimarex Energy Co (NYSE:XEC) is 11.7% while the ROI of GlaxoSmithKline PLC (NYSE:GSK) is 22.9%. Another figure that is to be considered while analyzing the profitability of a share is its EBITDA margin, XEC’s EBITDA Margin is 7.03 whereas GSK’s is 12.57.
Both the profitability ratios suggest that GlaxoSmithKline PLC (NYSE:GSK) is more suitable investment in terms of profitability and return.
EPS & Surprise Factor
Cimarex Energy Co (NYSE:XEC) reported $1.99/share EPS for the previous quarter where analysts were predicting an EPS to be $1.55/share Thus beating the analyst Estimates with a Surprise Factor of 28.4 Percent. While, GlaxoSmithKline PLC (NYSE:GSK) reported EPS of $0.92/share in the last quarter. The analysts projected EPS of $0.88/share depicting a Surprise of 4.5 Percent.
Taking a look at Earnings per Share, Cimarex Energy Co tends to be beating the analyst estimates more than GlaxoSmithKline PLC. so XEC is more profitable than GSK.
Technical Analysis of Cimarex Energy Co & GlaxoSmithKline PLC
Moving average convergence divergence (MACD) shows that Cimarex Energy Co (NYSE:XEC) is on a PRICE RELATIVITY trend While GlaxoSmithKline PLC (NYSE:GSK) is on PRICE RELATIVITY trend. The trend for the past 10-days shows that the Cimarex Energy Co was in BULLISH territory and GlaxoSmithKline PLC was in BULLISH territory.
XEC’s current statistics gauge that the stock candle is BEARISH with HIGH volatility. While GSK’s candle is BULLISH with HIGH.
EPS Growth Rate: XEC’s 54.02% versus GSK’s 8.8%
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 Cimarex Energy Co (NYSE:XEC) is predicted at 54.02% while GlaxoSmithKline PLC (NYSE:GSK) stands at 8.8%. These numbers suggest that XEC 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 XEC stands at 1.3 while GSK is at 0.9 whereas the debt ratio of the prior is 0.52 while the debt ratio of the later is 6.19.
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 for XEC and 2.5 for GSK which means XEC has Buy rating whereas GSK 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 XEC is $122.84 which is 26.24% of its current price while GSK has price target of 44.3 which is 6.91% 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.
XEC currently has price to earning P/E ratio of 16.23 whereas GSK has 28.6 while the forward P/E ratio for the prior stands at 10.88 and for the later it depicts the value of 13.92.
The price to Book P/B for XEC is 2.94, Price to Sale is at 4.05 and for GSK these ratios stand at 17.4 and 2.65.