The shares of The AES Corporation (NYSE:AES) and Cleveland-Cliffs Inc. (NYSE:CLF) were among the active stocks of the last trading sessions. The AES Corporation (NYSE:AES) soared to 0.45% closing at the price of $15.67 whereas the shares of Cleveland-Cliffs Inc. (NYSE:CLF) declined -3.42% with the decrease of -0.37 points closing at the price of $10.44. The AES Corporation has currently increase 27.5% in its stock over the period of 6-months while its rival Cleveland-Cliffs Inc. added 23.99% 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 The AES Corporation (NYSE:AES) is -0.8% while the ROI of Cleveland-Cliffs Inc. (NYSE:CLF) is 5.5%. Another figure that is to be considered while analyzing the profitability of a share is its EBITDA margin, AES’s EBITDA Margin is 8.59 whereas CLF’s is 6.35.
Both the profitability ratios suggest a mixed sentiment for The AES Corporation (NYSE:AES) and Cleveland-Cliffs Inc. (NYSE:CLF).
EPS & Surprise Factor
The AES Corporation (NYSE:AES) reported $0.35/share EPS for the previous quarter where analysts were predicting an EPS to be $0.3/share Thus beating the analyst Estimates with a Surprise Factor of 16.7 Percent. While, Cleveland-Cliffs Inc. (NYSE:CLF) reported EPS of $1.41/share in the last quarter. The analysts projected EPS of $0.66/share depicting a Surprise of 113.6 Percent.
Taking a look at Earnings per Share, Cleveland-Cliffs Inc. tends to be beating the analyst estimates more than The AES Corporation. so CLF is more profitable than AES.
Technical Analysis of The AES Corporation & Cleveland-Cliffs Inc.
Moving average convergence divergence (MACD) shows that The AES Corporation (NYSE:AES) is on a PRICE RELATIVITY trend While Cleveland-Cliffs Inc. (NYSE:CLF) is on PRICE RELATIVITY trend. The trend for the past 10-days shows that the The AES Corporation was in BULLISH territory and Cleveland-Cliffs Inc. was in BULLISH territory.
AES’s current statistics gauge that the stock candle is BEARISH with HIGH volatility. While CLF’s candle is BEARISH with HIGH.
EPS Growth Rate: AES’s 8.6% versus CLF’s -2.74%
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 The AES Corporation (NYSE:AES) is predicted at 8.6% while Cleveland-Cliffs Inc. (NYSE:CLF) stands at -2.74%. These numbers suggest that AES 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 AES stands at 1.3 while CLF is at 4.3 whereas the debt ratio of the prior is 5.92 while the debt ratio of the later is 0.
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 AES and 2.2 for CLF which means AES has Hold rating whereas CLF 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 AES is $14.33 which is -9.35% of its current price while CLF has price target of 13.39 which is 22.03% 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.
AES currently has price to earning P/E ratio of 36.87 whereas CLF has 9.92 while the forward P/E ratio for the prior stands at 11.98 and for the later it depicts the value of 6.15.
The price to Book P/B for AES is 3.13, Price to Sale is at 0.99 and for CLF these ratios stand at 0 and 1.38.