The shares of Maxim Integrated Products, Inc. (NASDAQ:MXIM) and International Paper Company (NYSE:IP) were among the active stocks of the last trading sessions. Maxim Integrated Products, Inc. (NASDAQ:MXIM) soared to 1.1% closing at the price of $53.22 whereas the shares of International Paper Company (NYSE:IP) declined -0.84% with the decrease of -0.4 points closing at the price of $46.99. Maxim Integrated Products, Inc. has currently decrease -7.6% in its stock over the period of 6-months while its rival International Paper Company subtracted -12.41% 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 Maxim Integrated Products, Inc. (NASDAQ:MXIM) is 21.2% while the ROI of International Paper Company (NYSE:IP) is 7.3%. Another figure that is to be considered while analyzing the profitability of a share is its EBITDA margin, MXIM’s EBITDA Margin is 13.13 whereas IP’s is 7.54.
Both the profitability ratios suggest that Maxim Integrated Products, Inc. (NASDAQ:MXIM) is more suitable investment in terms of profitability and return.
EPS & Surprise Factor
Maxim Integrated Products, Inc. (NASDAQ:MXIM) reported $0.75/share EPS for the previous quarter where analysts were predicting an EPS to be $0.75/share Thus meeting the analyst Estimates with a Surprise Factor of 0 Percent. While, International Paper Company (NYSE:IP) reported EPS of $1.56/share in the last quarter. The analysts projected EPS of $1.48/share depicting a Surprise of 5.4 Percent.
Taking a look at Earnings per Share, International Paper Company tends to be beating the analyst estimates more than Maxim Integrated Products, Inc.. so IP is more profitable than MXIM.
Technical Analysis of Maxim Integrated Products, Inc. & International Paper Company
Moving average convergence divergence (MACD) shows that Maxim Integrated Products, Inc. (NASDAQ:MXIM) is on a PRICE RELATIVITY trend While International Paper Company (NYSE:IP) is on PRICE RELATIVITY trend. The trend for the past 10-days shows that the Maxim Integrated Products, Inc. was in BULLISH territory and International Paper Company was in BULLISH territory.
MXIM’s current statistics gauge that the stock candle is BULLISH with HIGH volatility. While IP’s candle is BEARISH with HIGH.
EPS Growth Rate: MXIM’s 13.6% versus IP’s 12.8%
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 Maxim Integrated Products, Inc. (NASDAQ:MXIM) is predicted at 13.6% while International Paper Company (NYSE:IP) stands at 12.8%. These numbers suggest that MXIM 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 MXIM stands at 3.6 while IP is at 1.6 whereas the debt ratio of the prior is 0.78 while the debt ratio of the later is 1.68.
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 2.7 for MXIM and 2.3 for IP which means MXIM has Hold rating whereas IP 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 MXIM is $55.7 which is 4.45% of its current price while IP has price target of 56.75 which is 17.2% 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.
MXIM currently has price to earning P/E ratio of 19.84 whereas IP has 14.04 while the forward P/E ratio for the prior stands at 17.91 and for the later it depicts the value of 8.4.
The price to Book P/B for MXIM is 7.74, Price to Sale is at 5.95 and for IP these ratios stand at 2.84 and 0.86.