The shares of Etsy, Inc. (NASDAQ:ETSY) and Petroleo Brasileiro S.A.- Petrobras (NYSE:PBR-A) were among the active stocks of the last trading sessions. Etsy, Inc. (NASDAQ:ETSY) soared to 8.18% closing at the price of $54.1 whereas the shares of Petroleo Brasileiro S.A.- Petrobras (NYSE:PBR-A) declined -4.06% with the decrease of -0.57 points closing at the price of $13.46. Etsy, Inc. has currently increase 80.27% in its stock over the period of 6-months while its rival Petroleo Brasileiro S.A.- Petrobras subtracted -4.51% 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 Etsy, Inc. (NASDAQ:ETSY) is 7.5% while the ROI of Petroleo Brasileiro S.A.- Petrobras (NYSE:PBR-A) is 0%. Another figure that is to be considered while analyzing the profitability of a share is its EBITDA margin, ETSY’s EBITDA Margin is 58.53 whereas PBR-A’s is 6.97.
Both the profitability ratios suggest that Etsy, Inc. (NASDAQ:ETSY) is more suitable investment in terms of profitability and return.
EPS & Surprise Factor
Etsy, Inc. (NASDAQ:ETSY) reported $0.15/share EPS for the previous quarter where analysts were predicting an EPS to be $0.07/share Thus beating the analyst Estimates with a Surprise Factor of 114.3 Percent. While, Petroleo Brasileiro S.A.- Petrobras (NYSE:PBR-A) reported EPS of $0.26/share in the last quarter. The analysts projected EPS of $0.45/share depicting a Surprise of -42.2 Percent.
Taking a look at Earnings per Share, Etsy, Inc. tends to be beating the analyst estimates more than Petroleo Brasileiro S.A.- Petrobras. so ETSY is more profitable than PBR-A.
EPS Growth Rate: ETSY’s 15% versus PBR-A’s 0%
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 Etsy, Inc. (NASDAQ:ETSY) is predicted at 15% while Petroleo Brasileiro S.A.- Petrobras (NYSE:PBR-A) stands at 0%. These numbers suggest that ETSY 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 ETSY stands at 5.9 while PBR-A is at 0 whereas the debt ratio of the prior is 0.75 while the debt ratio of the later is 0.
The values of the both ratios suggest that ETSY 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 2.4 for ETSY and 2.5 for PBR-A which means ETSY has Hold rating whereas PBR-A 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 ETSY is $52.2 which is -3.64% of its current price while PBR-A has price target of 14.88 which is 9.54% 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.
ETSY currently has price to earning P/E ratio of 120.49 whereas PBR-A has 28.16 while the forward P/E ratio for the prior stands at 78.41 and for the later it depicts the value of 5.78.
The price to Book P/B for ETSY is 17.45, Price to Sale is at 13.25 and for PBR-A these ratios stand at 1.18 and 1.09.