The shares of Avis Budget Group, Inc. (NASDAQ:CAR) and Smith (A.O.) Corporation (NYSE:AOS) were among the active stocks of the last trading sessions. Avis Budget Group, Inc. (NASDAQ:CAR) declined to -1.16% closing at the price of $32.27 whereas the shares of Smith (A.O.) Corporation (NYSE:AOS) declined -1.87% with the decrease of -0.89 points closing at the price of $46.81. Avis Budget Group, Inc. has currently decrease -25.65% in its stock over the period of 6-months while its rival Smith (A.O.) Corporation subtracted -26.85% 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 Avis Budget Group, Inc. (NASDAQ:CAR) is 4.9% while the ROI of Smith (A.O.) Corporation (NYSE:AOS) is 18.4%. Another figure that is to be considered while analyzing the profitability of a share is its EBITDA margin, CAR’s EBITDA Margin is 18.12 whereas AOS’s is 11.77.
Both the profitability ratios suggest a mixed sentiment for Avis Budget Group, Inc. (NASDAQ:CAR) and Smith (A.O.) Corporation (NYSE:AOS).
EPS & Surprise Factor
Avis Budget Group, Inc. (NASDAQ:CAR) reported $3.33/share EPS for the previous quarter where analysts were predicting an EPS to be $3.54/share Thus lagging the analyst Estimates with a Surprise Factor of -5.9 Percent. While, Smith (A.O.) Corporation (NYSE:AOS) reported EPS of $0.61/share in the last quarter. The analysts projected EPS of $0.63/share depicting a Surprise of -3.2 Percent.
Taking a look at Earnings per Share, Smith (A.O.) Corporation tends to be beating the analyst estimates more than Avis Budget Group, Inc.. so AOS is more profitable than CAR.
Technical Analysis of Avis Budget Group, Inc. & Smith (A.O.) Corporation
Moving average convergence divergence (MACD) shows that Avis Budget Group, Inc. (NASDAQ:CAR) is on a PRICE RELATIVITY trend While Smith (A.O.) Corporation (NYSE:AOS) is on PRICE RELATIVITY trend. The trend for the past 10-days shows that the Avis Budget Group, Inc. was in BULLISH territory and Smith (A.O.) Corporation was in BULLISH territory.
CAR’s current statistics gauge that the stock candle is BEARISH with HIGH volatility. While AOS’s candle is BEARISH with HIGH.
EPS Growth Rate: CAR’s 15.3% versus AOS’s 10.9%
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 Avis Budget Group, Inc. (NASDAQ:CAR) is predicted at 15.3% while Smith (A.O.) Corporation (NYSE:AOS) stands at 10.9%. These numbers suggest that CAR 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 CAR stands at 1.2 while AOS is at 2.2 whereas the debt ratio of the prior is 41.25 while the debt ratio of the later is 0.14.
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 2.3 for CAR and 2.2 for AOS which means CAR has Hold rating whereas AOS 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 CAR is $43.63 which is 26.04% of its current price while AOS has price target of 59.29 which is 21.05% 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.
CAR currently has price to earning P/E ratio of 14.37 whereas AOS has 19.46 while the forward P/E ratio for the prior stands at 8.28 and for the later it depicts the value of 16.65.
The price to Book P/B for CAR is 7, Price to Sale is at 0.28 and for AOS these ratios stand at 4.63 and 2.54.