The shares of Prudential Financial, Inc. (NYSE:PRU) and Eaton Corporation, PLC (NYSE:ETN) were among the active stocks of the last trading sessions. Prudential Financial, Inc. (NYSE:PRU) declined to -3.69% closing at the price of $96.97 whereas the shares of Eaton Corporation, PLC (NYSE:ETN) declined -1.56% with the decrease of -1.18 points closing at the price of $74.24. Prudential Financial, Inc. has currently decrease -2.91% in its stock over the period of 6-months while its rival Eaton Corporation, PLC subtracted -2.92% 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 Prudential Financial, Inc. (NYSE:PRU) is 6.8% while the ROI of Eaton Corporation, PLC (NYSE:ETN) is 8.4%. Another figure that is to be considered while analyzing the profitability of a share is its EBITDA margin, PRU’s EBITDA Margin is 5.91 whereas ETN’s is 10.7.
Both the profitability ratios suggest that Eaton Corporation, PLC (NYSE:ETN) is more suitable investment in terms of profitability and return.
EPS & Surprise Factor
Prudential Financial, Inc. (NYSE:PRU) reported $3.15/share EPS for the previous quarter where analysts were predicting an EPS to be $3.16/share Thus lagging the analyst Estimates with a Surprise Factor of -0.3 Percent. While, Eaton Corporation, PLC (NYSE:ETN) reported EPS of $1.43/share in the last quarter. The analysts projected EPS of $1.43/share depicting a Surprise of 0 Percent.
Taking a look at Earnings per Share, Eaton Corporation, PLC tends to be beating the analyst estimates more than Prudential Financial, Inc.. so ETN is more profitable than PRU.
Technical Analysis of Prudential Financial, Inc. & Eaton Corporation, PLC
Moving average convergence divergence (MACD) shows that Prudential Financial, Inc. (NYSE:PRU) is on a PRICE RELATIVITY trend While Eaton Corporation, PLC (NYSE:ETN) is on PRICE RELATIVITY trend. The trend for the past 10-days shows that the Prudential Financial, Inc. was in BULLISH territory and Eaton Corporation, PLC was in BULLISH territory.
PRU’s current statistics gauge that the stock candle is BULLISH with HIGH volatility. While ETN’s candle is BEARISH with HIGH.
EPS Growth Rate: PRU’s 9% versus ETN’s 9.43%
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 Prudential Financial, Inc. (NYSE:PRU) is predicted at 9% while Eaton Corporation, PLC (NYSE:ETN) stands at 9.43%. These numbers suggest that ETN 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 PRU stands at 0 while ETN is at 1.5 whereas the debt ratio of the prior is 0.41 while the debt ratio of the later is 0.43.
The values of the both ratios suggest that ETN 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 2.2 for PRU and 2.2 for ETN which means PRU has Hold rating whereas ETN 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 PRU is $119.53 which is 18.87% of its current price while ETN has price target of 88.11 which is 15.74% 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.
PRU currently has price to earning P/E ratio of 9.16 whereas ETN has 15.61 while the forward P/E ratio for the prior stands at 7.45 and for the later it depicts the value of 12.59.
The price to Book P/B for PRU is 0.84, Price to Sale is at 0.66 and for ETN these ratios stand at 1.92 and 1.52.