The shares of Kosmos Energy Ltd. (NYSE:KOS) and STMicroelectronics N.V. (NYSE:STM) were among the active stocks of the last trading sessions. Kosmos Energy Ltd. (NYSE:KOS) declined to -3.43% closing at the price of $5.91 whereas the shares of STMicroelectronics N.V. (NYSE:STM) declined -1.78% with the decrease of -0.27 points closing at the price of $14.89. Kosmos Energy Ltd. has currently decrease -15.45% in its stock over the period of 6-months while its rival STMicroelectronics N.V. subtracted -38.11% 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 Kosmos Energy Ltd. (NYSE:KOS) is -5.7% while the ROI of STMicroelectronics N.V. (NYSE:STM) is 11.3%. Another figure that is to be considered while analyzing the profitability of a share is its EBITDA margin, KOS’s EBITDA Margin is -45.74 whereas STM’s is 6.96.
Both the profitability ratios suggest that STMicroelectronics N.V. (NYSE:STM) is more suitable investment in terms of profitability and return.
EPS & Surprise Factor
Kosmos Energy Ltd. (NYSE:KOS) reported $-0.23/share EPS for the previous quarter where analysts were predicting an EPS to be $-0.23/share Thus meeting the analyst Estimates with a Surprise Factor of 0 Percent. While, STMicroelectronics N.V. (NYSE:STM) reported EPS of $0.41/share in the last quarter. The analysts projected EPS of $0.37/share depicting a Surprise of 10.8 Percent.
Taking a look at Earnings per Share, STMicroelectronics N.V. tends to be beating the analyst estimates more than Kosmos Energy Ltd.. so STM is more profitable than KOS.
Technical Analysis of Kosmos Energy Ltd. & STMicroelectronics N.V.
Moving average convergence divergence (MACD) shows that Kosmos Energy Ltd. (NYSE:KOS) is on a PRICE RELATIVITY trend While STMicroelectronics N.V. (NYSE:STM) is on PRICE RELATIVITY trend. The trend for the past 10-days shows that the Kosmos Energy Ltd. was in BEARISH territory and STMicroelectronics N.V. was in BULLISH territory.
KOS’s current statistics gauge that the stock candle is BEARISH with HIGH volatility. While STM’s candle is BULLISH with MEDIUM.
EPS Growth Rate: KOS’s 23.8% versus STM’s 49%
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 Kosmos Energy Ltd. (NYSE:KOS) is predicted at 23.8% while STMicroelectronics N.V. (NYSE:STM) stands at 49%. These numbers suggest that STM 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 KOS stands at 1 while STM is at 2.4 whereas the debt ratio of the prior is 1.57 while the debt ratio of the later is 0.31.
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 1.9 for KOS and 3 for STM which means KOS has Buy rating whereas STM 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 KOS is $10.28 which is 42.51% of its current price while STM has price target of 20.32 which is 26.72% 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.
KOS currently has price to earning P/E ratio of 0 whereas STM has 12 while the forward P/E ratio for the prior stands at 13.78 and for the later it depicts the value of 10.88.
The price to Book P/B for KOS is 3.14, Price to Sale is at 3.6 and for STM these ratios stand at 2.39 and 1.42.