The shares of Harmony Gold Mining Company Limited (NYSE:HMY) and First Majestic Silver Corp. (NYSE:AG) were among the active stocks of the last trading sessions. Harmony Gold Mining Company Limited (NYSE:HMY) declined to -0.57% closing at the price of $1.75 whereas the shares of First Majestic Silver Corp. (NYSE:AG) soared 0.73% with the increase of 0.04 points closing at the price of $5.54. Harmony Gold Mining Company Limited has currently decrease -8.85% in its stock over the period of 6-months while its rival First Majestic Silver Corp. subtracted -22.73% 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 Harmony Gold Mining Company Limited (NYSE:HMY) is -14.5% while the ROI of First Majestic Silver Corp. (NYSE:AG) is 0%. Another figure that is to be considered while analyzing the profitability of a share is its EBITDA margin, HMY’s EBITDA Margin is 4.38 whereas AG’s is 21.87.
Both the profitability ratios suggest that First Majestic Silver Corp. (NYSE:AG) is more suitable investment in terms of profitability and return.
EPS & Surprise Factor
Technical Analysis of Harmony Gold Mining Company Limited & First Majestic Silver Corp.
Moving average convergence divergence (MACD) shows that Harmony Gold Mining Company Limited (NYSE:HMY) is on a PRICE RELATIVITY trend While First Majestic Silver Corp. (NYSE:AG) is on PRICE RELATIVITY trend. The trend for the past 10-days shows that the Harmony Gold Mining Company Limited was in BEARISH territory and First Majestic Silver Corp. was in BEARISH territory.
HMY’s current statistics gauge that the stock candle is NEUTRAL with MEDIUM volatility. While AG’s candle is BULLISH with LOW.
EPS Growth Rate: HMY’s 0% versus AG’s 46.8%
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 Harmony Gold Mining Company Limited (NYSE:HMY) is predicted at 0% while First Majestic Silver Corp. (NYSE:AG) stands at 46.8%. These numbers suggest that AG 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 HMY stands at 1.2 while AG is at 0 whereas the debt ratio of the prior is 0.22 while the debt ratio of the later is 0.
The values of the both ratios suggest that HMY 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 3 for HMY and 2.3 for AG which means HMY has Hold rating whereas AG 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 HMY is $2.3 which is 23.91% of its current price while AG has price target of 9.54 which is 41.93% 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.
HMY currently has price to earning P/E ratio of 0 whereas AG has 0 while the forward P/E ratio for the prior stands at 4.07 and for the later it depicts the value of 79.14.
The price to Book P/B for HMY is 0.45, Price to Sale is at 0.65 and for AG these ratios stand at 1.43 and 4.1.