The shares of Aflac Incorporated (NYSE:AFL) and Textron Inc. (NYSE:TXT) were among the active stocks of the last trading sessions. Aflac Incorporated (NYSE:AFL) soared to 0.33% closing at the price of $45.21 whereas the shares of Textron Inc. (NYSE:TXT) declined -0.82% with the decrease of -0.47 points closing at the price of $56.73. Aflac Incorporated has currently decrease -0.04% in its stock over the period of 6-months while its rival Textron Inc. subtracted -13.77% 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 Aflac Incorporated (NYSE:AFL) is 9.7% while the ROI of Textron Inc. (NYSE:TXT) is 7.8%. Another figure that is to be considered while analyzing the profitability of a share is its EBITDA margin, AFL’s EBITDA Margin is 8.49 whereas TXT’s is 10.95.
Both the profitability ratios suggest a mixed sentiment for Aflac Incorporated (NYSE:AFL) and Textron Inc. (NYSE:TXT).
EPS & Surprise Factor
Aflac Incorporated (NYSE:AFL) reported $1.03/share EPS for the previous quarter where analysts were predicting an EPS to be $0.99/share Thus beating the analyst Estimates with a Surprise Factor of 4 Percent. While, Textron Inc. (NYSE:TXT) reported EPS of $0.61/share in the last quarter. The analysts projected EPS of $0.76/share depicting a Surprise of -19.7 Percent.
Taking a look at Earnings per Share, Aflac Incorporated tends to be beating the analyst estimates more than Textron Inc.. so AFL is more profitable than TXT.
Technical Analysis of Aflac Incorporated & Textron Inc.
Moving average convergence divergence (MACD) shows that Aflac Incorporated (NYSE:AFL) is on a PRICE RELATIVITY trend While Textron Inc. (NYSE:TXT) is on PRICE RELATIVITY trend. The trend for the past 10-days shows that the Aflac Incorporated was in BULLISH territory and Textron Inc. was in BULLISH territory.
AFL’s current statistics gauge that the stock candle is BULLISH with HIGH volatility. While TXT’s candle is BEARISH with HIGH.
EPS Growth Rate: AFL’s 8.5% versus TXT’s 17.3%
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 Aflac Incorporated (NYSE:AFL) is predicted at 8.5% while Textron Inc. (NYSE:TXT) stands at 17.3%. These numbers suggest that TXT 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 AFL stands at 0 while TXT is at 2.1 whereas the debt ratio of the prior is 0.23 while the debt ratio of the later is 0.7.
The values of the both ratios suggest that TXT 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 2.8 for AFL and 1.8 for TXT which means AFL has Hold rating whereas TXT 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 AFL is $46.71 which is 3.21% of its current price while TXT has price target of 73.83 which is 23.16% 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.
AFL currently has price to earning P/E ratio of 11.54 whereas TXT has 12.74 while the forward P/E ratio for the prior stands at 10.84 and for the later it depicts the value of 15.98.
The price to Book P/B for AFL is 1.49, Price to Sale is at 1.57 and for TXT these ratios stand at 2.52 and 0.98.