The shares of Kroger Company (The) (NYSE:KR) and iQIYI, Inc. (NASDAQ:IQ) were among the active stocks of the last trading sessions. Kroger Company (The) (NYSE:KR) soared to 0.1% closing at the price of $31.35 whereas the shares of iQIYI, Inc. (NASDAQ:IQ) declined -4.92% with the decrease of -1.08 points closing at the price of $20.87. Kroger Company (The) has currently increase 27.59% in its stock over the period of 6-months while its rival iQIYI, Inc. added 1.71% 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 Kroger Company (The) (NYSE:KR) is 7% while the ROI of iQIYI, Inc. (NASDAQ:IQ) is 28.8%. Another figure that is to be considered while analyzing the profitability of a share is its EBITDA margin, KR’s EBITDA Margin is 7.3 whereas IQ’s is 14.31.
Both the profitability ratios suggest that iQIYI, Inc. (NASDAQ:IQ) is more suitable investment in terms of profitability and return.
EPS & Surprise Factor
Kroger Company (The) (NYSE:KR) reported $0.41/share EPS for the previous quarter where analysts were predicting an EPS to be $0.38/share Thus beating the analyst Estimates with a Surprise Factor of 7.9 Percent. While, iQIYI, Inc. (NASDAQ:IQ) reported EPS of $-0.63/share in the last quarter. The analysts projected EPS of $-0.43/share depicting a Surprise of -46.5 Percent.
Taking a look at Earnings per Share, Kroger Company (The) tends to be beating the analyst estimates more than iQIYI, Inc.. so KR is more profitable than IQ.
Technical Analysis of Kroger Company (The) & iQIYI, Inc.
Moving average convergence divergence (MACD) shows that Kroger Company (The) (NYSE:KR) is on a PRICE RELATIVITY trend While iQIYI, Inc. (NASDAQ:IQ) is on PRICE RELATIVITY trend. The trend for the past 10-days shows that the Kroger Company (The) was in BULLISH territory and iQIYI, Inc. was in BULLISH territory.
KR’s current statistics gauge that the stock candle is BEARISH with HIGH volatility. While IQ’s candle is NEUTRAL with MEDIUM.
EPS Growth Rate: KR’s 5.48% versus IQ’s 40.3%
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 Kroger Company (The) (NYSE:KR) is predicted at 5.48% while iQIYI, Inc. (NASDAQ:IQ) stands at 40.3%. These numbers suggest that IQ 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 KR stands at 0.7 while IQ is at 0.9 whereas the debt ratio of the prior is 1.97 while the debt ratio of the later is 0.07.
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 2.5 for KR and 2 for IQ which means KR has Hold rating whereas IQ 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 KR is $30.91 which is -1.42% of its current price while IQ has price target of 28.28 which is 26.2% 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.
KR currently has price to earning P/E ratio of 9.36 whereas IQ has 8.95 while the forward P/E ratio for the prior stands at 13.88 and for the later it depicts the value of 0.
The price to Book P/B for KR is 3.39, Price to Sale is at 0.2 and for IQ these ratios stand at 3.92 and 4.85.