The shares of International Business Machines Corporation (NYSE:IBM) and KeyCorp (NYSE:KEY) were among the active stocks of the last trading sessions. International Business Machines Corporation (NYSE:IBM) declined to -1.17% closing at the price of $123.38 whereas the shares of KeyCorp (NYSE:KEY) soared 0.21% with the increase of 0.04 points closing at the price of $18.74. International Business Machines Corporation has currently decrease -14.4% in its stock over the period of 6-months while its rival KeyCorp subtracted -7.5% 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 International Business Machines Corporation (NYSE:IBM) is 17.4% while the ROI of KeyCorp (NYSE:KEY) is 10.8%. Another figure that is to be considered while analyzing the profitability of a share is its EBITDA margin, IBM’s EBITDA Margin is 9.12 whereas KEY’s is NOT AVAILABLE.
Both the profitability ratios suggest a mixed sentiment for International Business Machines Corporation (NYSE:IBM) and KeyCorp (NYSE:KEY).
EPS & Surprise Factor
International Business Machines Corporation (NYSE:IBM) reported $3.42/share EPS for the previous quarter where analysts were predicting an EPS to be $3.4/share Thus beating the analyst Estimates with a Surprise Factor of 0.6 Percent. While, KeyCorp (NYSE:KEY) reported EPS of $0.45/share in the last quarter. The analysts projected EPS of $0.45/share depicting a Surprise of 0 Percent.
Taking a look at Earnings per Share, International Business Machines Corporation tends to be beating the analyst estimates more than KeyCorp. so IBM is more profitable than KEY.
Technical Analysis of International Business Machines Corporation & KeyCorp
Moving average convergence divergence (MACD) shows that International Business Machines Corporation (NYSE:IBM) is on a PRICE RELATIVITY trend While KeyCorp (NYSE:KEY) is on PRICE RELATIVITY trend. The trend for the past 10-days shows that the International Business Machines Corporation was in BULLISH territory and KeyCorp was in BULLISH territory.
IBM’s current statistics gauge that the stock candle is BULLISH with HIGH volatility. While KEY’s candle is BULLISH with HIGH.
EPS Growth Rate: IBM’s 0.96% versus KEY’s 9.5%
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 International Business Machines Corporation (NYSE:IBM) is predicted at 0.96% while KeyCorp (NYSE:KEY) stands at 9.5%. These numbers suggest that KEY 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 IBM stands at 1.3 while KEY is at 0 whereas the debt ratio of the prior is 2.37 while the debt ratio of the later is 1.01.
The values of the both ratios suggest that IBM 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 2.7 for IBM and 2 for KEY which means IBM has Hold rating whereas KEY has Buy 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 IBM is $155.94 which is 20.88% of its current price while KEY has price target of 22.48 which is 16.64% 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.
IBM currently has price to earning P/E ratio of 10.07 whereas KEY has 12.01 while the forward P/E ratio for the prior stands at 8.85 and for the later it depicts the value of 9.81.
The price to Book P/B for IBM is 5.68, Price to Sale is at 1.41 and for KEY these ratios stand at 1.41 and 4.19.