The shares of Encana Corporation (NYSE:ECA) and Novelion Therapeutics Inc. (NASDAQ:NVLN) were among the active stocks of the last trading sessions. Encana Corporation (NYSE:ECA) declined to -0.8% closing at the price of $8.71 whereas the shares of Novelion Therapeutics Inc. (NASDAQ:NVLN) soared 77.23% with the increase of 0.54 points closing at the price of $1.25. Encana Corporation has currently decrease -34.11% in its stock over the period of 6-months while its rival Novelion Therapeutics Inc. subtracted -69.06% 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 Encana Corporation (NYSE:ECA) is 6.6% while the ROI of Novelion Therapeutics Inc. (NASDAQ:NVLN) is -32%. Another figure that is to be considered while analyzing the profitability of a share is its EBITDA margin, ECA’s EBITDA Margin is 9.3 whereas NVLN’s is -3.02.
Both the profitability ratios suggest that Encana Corporation (NYSE:ECA) is more suitable investment in terms of profitability and return.
EPS & Surprise Factor
Encana Corporation (NYSE:ECA) reported $0.17/share EPS for the previous quarter where analysts were predicting an EPS to be $0.13/share Thus beating the analyst Estimates with a Surprise Factor of 30.8 Percent. While, Novelion Therapeutics Inc. (NASDAQ:NVLN) reported EPS of $-1.67/share in the last quarter. The analysts projected EPS of $-0.79/share depicting a Surprise of -111.4 Percent.
Taking a look at Earnings per Share, Encana Corporation tends to be beating the analyst estimates more than Novelion Therapeutics Inc. . so ECA is more profitable than NVLN.
Technical Analysis of Encana Corporation & Novelion Therapeutics Inc.
Moving average convergence divergence (MACD) shows that Encana Corporation (NYSE:ECA) is on a PRICE RELATIVITY trend While Novelion Therapeutics Inc. (NASDAQ:NVLN) is on PRICE RELATIVITY trend. The trend for the past 10-days shows that the Encana Corporation was in BEARISH territory and Novelion Therapeutics Inc. was in BULLISH territory.
ECA’s current statistics gauge that the stock candle is BULLISH with HIGH volatility. While NVLN’s candle is BULLISH with HIGH.
EPS Growth Rate: ECA’s 37.8% versus NVLN’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 Encana Corporation (NYSE:ECA) is predicted at 37.8% while Novelion Therapeutics Inc. (NASDAQ:NVLN) stands at 0%. These numbers suggest that ECA 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 ECA stands at 0.7 while NVLN is at 1.3 whereas the debt ratio of the prior is 0.88 while the debt ratio of the later is 0.
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 1.9 for ECA and 2 for NVLN which means ECA has Buy rating whereas NVLN 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 ECA is $17.11 which is 49.09% of its current price while NVLN has price target of 6.5 which is 80.77% 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.
ECA currently has price to earning P/E ratio of 21.72 whereas NVLN has 0 while the forward P/E ratio for the prior stands at 7.87 and for the later it depicts the value of 0.
The price to Book P/B for ECA is 1.29, Price to Sale is at 2 and for NVLN these ratios stand at 0 and 0.19.