The shares of Facebook, Inc. (NASDAQ:FB) and Wells Fargo & Company (NYSE:WFC) were among the active stocks of the last trading sessions. Facebook, Inc. (NASDAQ:FB) declined to -2.42% closing at the price of $147.87 whereas the shares of Wells Fargo & Company (NYSE:WFC) declined -0.78% with the decrease of -0.42 points closing at the price of $53.16. Facebook, Inc. has currently decrease -20.92% in its stock over the period of 6-months while its rival Wells Fargo & Company subtracted -2.37% 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 Facebook, Inc. (NASDAQ:FB) is 24% while the ROI of Wells Fargo & Company (NYSE:WFC) is 9.8%. Another figure that is to be considered while analyzing the profitability of a share is its EBITDA margin, FB’s EBITDA Margin is 14.73 whereas WFC’s is NOT AVAILABLE.
Both the profitability ratios suggest a mixed sentiment for Facebook, Inc. (NASDAQ:FB) and Wells Fargo & Company (NYSE:WFC).
EPS & Surprise Factor
Facebook, Inc. (NASDAQ:FB) reported $1.76/share EPS for the previous quarter where analysts were predicting an EPS to be $1.47/share Thus beating the analyst Estimates with a Surprise Factor of 19.7 Percent. While, Wells Fargo & Company (NYSE:WFC) reported EPS of $1.13/share in the last quarter. The analysts projected EPS of $1.17/share depicting a Surprise of -3.4 Percent.
Taking a look at Earnings per Share, Facebook, Inc. tends to be beating the analyst estimates more than Wells Fargo & Company. so FB is more profitable than WFC.
Technical Analysis of Facebook, Inc. & Wells Fargo & Company
Moving average convergence divergence (MACD) shows that Facebook, Inc. (NASDAQ:FB) is on a PRICE RELATIVITY trend While Wells Fargo & Company (NYSE:WFC) is on PRICE RELATIVITY trend. The trend for the past 10-days shows that the Facebook, Inc. was in BULLISH territory and Wells Fargo & Company was in BULLISH territory.
FB’s current statistics gauge that the stock candle is BEARISH with HIGH volatility. While WFC’s candle is BULLISH with HIGH.
EPS Growth Rate: FB’s 18.42% versus WFC’s 9.6%
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 Facebook, Inc. (NASDAQ:FB) is predicted at 18.42% while Wells Fargo & Company (NYSE:WFC) stands at 9.6%. These numbers suggest that FB 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 FB stands at 9 while WFC is at 0 whereas the debt ratio of the prior is 0 while the debt ratio of the later is 1.22.
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 FB and 2.5 for WFC which means FB has Buy rating whereas WFC 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 FB is $197.6 which is 25.17% of its current price while WFC has price target of 61.93 which is 14.16% 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.
FB currently has price to earning P/E ratio of 19.96 whereas WFC has 14.09 while the forward P/E ratio for the prior stands at 19.49 and for the later it depicts the value of 10.38.
The price to Book P/B for FB is 5.31, Price to Sale is at 8.3 and for WFC these ratios stand at 1.44 and 4.