The shares of J.C. Penney Company, Inc. Holding Company (NYSE:JCP) and PulteGroup, Inc. (NYSE:PHM) were among the active stocks of the last trading sessions. J.C. Penney Company, Inc. Holding Company (NYSE:JCP) declined to -3.97% closing at the price of $1.45 whereas the shares of PulteGroup, Inc. (NYSE:PHM) declined -3.47% with the decrease of -0.87 points closing at the price of $24.23. J.C. Penney Company, Inc. Holding Company has currently decrease -48.94% in its stock over the period of 6-months while its rival PulteGroup, Inc. subtracted -22.64% 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 J.C. Penney Company, Inc. Holding Company (NYSE:JCP) is 2.4% while the ROI of PulteGroup, Inc. (NYSE:PHM) is 8.2%. Another figure that is to be considered while analyzing the profitability of a share is its EBITDA margin, JCP’s EBITDA Margin is 5.67 whereas PHM’s is 6.5.
Both the profitability ratios suggest that PulteGroup, Inc. (NYSE:PHM) is more suitable investment in terms of profitability and return.
EPS & Surprise Factor
J.C. Penney Company, Inc. Holding Company (NYSE:JCP) reported $-0.38/share EPS for the previous quarter where analysts were predicting an EPS to be $-0.06/share Thus lagging the analyst Estimates with a Surprise Factor of -533.3 Percent. While, PulteGroup, Inc. (NYSE:PHM) reported EPS of $1.01/share in the last quarter. The analysts projected EPS of $0.95/share depicting a Surprise of 6.3 Percent.
Taking a look at Earnings per Share, PulteGroup, Inc. tends to be beating the analyst estimates more than J.C. Penney Company, Inc. Holding Company. so PHM is more profitable than JCP.
Technical Analysis of J.C. Penney Company, Inc. Holding Company & PulteGroup, Inc.
Moving average convergence divergence (MACD) shows that J.C. Penney Company, Inc. Holding Company (NYSE:JCP) is on a PRICE RELATIVITY trend While PulteGroup, Inc. (NYSE:PHM) is on PRICE RELATIVITY trend. The trend for the past 10-days shows that the J.C. Penney Company, Inc. Holding Company was in BULLISH territory and PulteGroup, Inc. was in BULLISH territory.
JCP’s current statistics gauge that the stock candle is BEARISH with MEDIUM volatility. While PHM’s candle is BEARISH with HIGH.
EPS Growth Rate: JCP’s 0% versus PHM’s 38.72%
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 J.C. Penney Company, Inc. Holding Company (NYSE:JCP) is predicted at 0% while PulteGroup, Inc. (NYSE:PHM) stands at 38.72%. These numbers suggest that PHM 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 JCP stands at 1.6 while PHM is at 0 whereas the debt ratio of the prior is 3.47 while the debt ratio of the later is 0.69.
The values of the both ratios suggest that JCP 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 3.3 for JCP and 2.8 for PHM which means JCP has Sell rating whereas PHM 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 JCP is $1.58 which is 8.23% of its current price while PHM has price target of 26.29 which is 7.84% 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.
JCP currently has price to earning P/E ratio of 0 whereas PHM has 6.79 while the forward P/E ratio for the prior stands at 0 and for the later it depicts the value of 6.47.
The price to Book P/B for JCP is 0.38, Price to Sale is at 0.04 and for PHM these ratios stand at 1.45 and 0.69.