Which Stock is better? Finisar Corporation (FNSR) and TOP Ships Inc. (TOPS)

The shares of Finisar Corporation (NASDAQ:FNSR) and TOP Ships Inc. (NASDAQ:TOPS) were among the active stocks of the last trading sessions. Finisar Corporation (NASDAQ:FNSR) soared to 5.3% closing at the price of $18.88 whereas the shares of TOP Ships Inc. (NASDAQ:TOPS) declined -13.77% with the decrease of -0.23 points closing at the price of $1.44. Finisar Corporation has currently increase 14.35% in its stock over the period of 6-months while its rival TOP Ships Inc. subtracted -11.11% 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 Finisar Corporation (NASDAQ:FNSR) is 1% while the ROI of TOP Ships Inc. (NASDAQ:TOPS) is 0.8%. Another figure that is to be considered while analyzing the profitability of a share is its EBITDA margin, FNSR’s EBITDA Margin is 19.02 whereas TOPS’s is 14.72.

Both the profitability ratios suggest that Finisar Corporation (NASDAQ:FNSR) is more suitable investment in terms of profitability and return.

EPS & Surprise Factor

Finisar Corporation (NASDAQ:FNSR) reported $0.18/share EPS for the previous quarter where analysts were predicting an EPS to be $0.12/share Thus beating the analyst Estimates with a Surprise Factor of 50 Percent. While, TOP Ships Inc. (NASDAQ:TOPS) reported EPS of $3780000/share in the last quarter. The analysts projected EPS of $16380000/share depicting a Surprise of -76.9 Percent.

Taking a look at Earnings per Share, Finisar Corporation tends to be beating the analyst estimates more than TOP Ships Inc.. so FNSR is more profitable than TOPS.

Technical Analysis of Finisar Corporation & TOP Ships Inc.

Moving average convergence divergence (MACD) shows that Finisar Corporation (NASDAQ:FNSR) is on a PRICE RELATIVITY trend While TOP Ships Inc. (NASDAQ:TOPS) is on PRICE RELATIVITY trend. The trend for the past 10-days shows that the Finisar Corporation was in BULLISH territory and TOP Ships Inc. was in BEARISH territory.

FNSR’s current statistics gauge that the stock candle is BULLISH with HIGH volatility. While TOPS’s candle is BEARISH with HIGH.

EPS Growth Rate: FNSR’s 16.5% versus TOPS’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 Finisar Corporation (NASDAQ:FNSR) is predicted at 16.5% while TOP Ships Inc. (NASDAQ:TOPS) stands at 0%. These numbers suggest that FNSR 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 FNSR stands at 3.6 while TOPS is at 0.2 whereas the debt ratio of the prior is 0.47 while the debt ratio of the later is 1.07.

The values of the both ratios suggest that one is more liquid and other investment is more risk free.

Analyst Recommendations

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 2.5 for FNSR and 3 for TOPS which means FNSR has Hold rating whereas TOPS 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 FNSR is $22.04 which is 14.34% of its current price while TOPS has price target of 750 which is 99.81% of its current price.

Valuation Ratios

Valuation is the process of determining the company’s worth for an investor, the valuation ratios give an insight to that worthiness.

FNSR currently has price to earning P/E ratio of 0 whereas TOPS has 0 while the forward P/E ratio for the prior stands at 12.51 and for the later it depicts the value of 0.

The price to Book P/B for FNSR is 1.36, Price to Sale is at 1.71 and for TOPS these ratios stand at 0.23 and 0.71.