The shares of Melco Resorts & Entertainment Limited (NASDAQ:MLCO) and Microchip Technology Incorporated (NASDAQ:MCHP) were among the active stocks of the last trading sessions. Melco Resorts & Entertainment Limited (NASDAQ:MLCO) declined to -11.17% closing at the price of $16.14 whereas the shares of Microchip Technology Incorporated (NASDAQ:MCHP) soared 5.9% with the increase of 4.15 points closing at the price of $74.45. Melco Resorts & Entertainment Limited has currently decrease -48.63% in its stock over the period of 6-months while its rival Microchip Technology Incorporated subtracted -19.9% 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 Melco Resorts & Entertainment Limited (NASDAQ:MLCO) is 8.2% while the ROI of Microchip Technology Incorporated (NASDAQ:MCHP) is 15.1%. Another figure that is to be considered while analyzing the profitability of a share is its EBITDA margin, MLCO’s EBITDA Margin is 9.19 whereas MCHP’s is 16.89.
Both the profitability ratios suggest that Microchip Technology Incorporated (NASDAQ:MCHP) is more suitable investment in terms of profitability and return.
EPS & Surprise Factor
Melco Resorts & Entertainment Limited (NASDAQ:MLCO) reported $0.12/share EPS for the previous quarter where analysts were predicting an EPS to be $0.27/share Thus lagging the analyst Estimates with a Surprise Factor of -55.6 Percent. While, Microchip Technology Incorporated (NASDAQ:MCHP) reported EPS of $1.81/share in the last quarter. The analysts projected EPS of $1.73/share depicting a Surprise of 4.6 Percent.
Taking a look at Earnings per Share, Microchip Technology Incorporated tends to be beating the analyst estimates more than Melco Resorts & Entertainment Limited. so MCHP is more profitable than MLCO.
Technical Analysis of Melco Resorts & Entertainment Limited & Microchip Technology Incorporated
Moving average convergence divergence (MACD) shows that Melco Resorts & Entertainment Limited (NASDAQ:MLCO) is on a PRICE RELATIVITY trend While Microchip Technology Incorporated (NASDAQ:MCHP) is on PRICE RELATIVITY trend. The trend for the past 10-days shows that the Melco Resorts & Entertainment Limited was in BULLISH territory and Microchip Technology Incorporated was in BULLISH territory.
MLCO’s current statistics gauge that the stock candle is BEARISH with HIGH volatility. While MCHP’s candle is BULLISH with HIGH.
EPS Growth Rate: MLCO’s 12% versus MCHP’s 15.1%
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 Melco Resorts & Entertainment Limited (NASDAQ:MLCO) is predicted at 12% while Microchip Technology Incorporated (NASDAQ:MCHP) stands at 15.1%. These numbers suggest that MCHP 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 MLCO stands at 1 while MCHP is at 1.3 whereas the debt ratio of the prior is 1.28 while the debt ratio of the later is 2.22.
The values of the both ratios suggest that MCHP 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 1.8 for MLCO and 1.9 for MCHP which means MLCO has Buy rating whereas MCHP 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 MLCO is $29.12 which is 44.57% of its current price while MCHP has price target of 106.47 which is 30.07% 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.
MLCO currently has price to earning P/E ratio of 19.4 whereas MCHP has 27.94 while the forward P/E ratio for the prior stands at 12.63 and for the later it depicts the value of 9.93.
The price to Book P/B for MLCO is 2.67, Price to Sale is at 1.51 and for MCHP these ratios stand at 3.42 and 4.19.