Which Stock will you hold for a while? Square, Inc. (SQ) or Roku, Inc. (ROKU)

The shares of Square, Inc. (NYSE:SQ) and Roku, Inc. (NASDAQ:ROKU) were among the active stocks of the last trading sessions. Square, Inc. (NYSE:SQ) declined to -9.02% closing at the price of $75.23 whereas the shares of Roku, Inc. (NASDAQ:ROKU) declined -22.29% with the decrease of -13.12 points closing at the price of $45.74. Square, Inc. has currently increase 37.46% in its stock over the period of 6-months while its rival Roku, Inc. added 30.17% 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 Square, Inc. (NYSE:SQ) is -4.8% while the ROI of Roku, Inc. (NASDAQ:ROKU) is -14.6%. Another figure that is to be considered while analyzing the profitability of a share is its EBITDA margin, SQ’s EBITDA Margin is -2377.15 whereas ROKU’s is 24189.64.

Both the profitability ratios suggest a mixed sentiment for Square, Inc. (NYSE:SQ) and Roku, Inc. (NASDAQ:ROKU).

EPS & Surprise Factor

Square, Inc. (NYSE:SQ) reported $0.13/share EPS for the previous quarter where analysts were predicting an EPS to be $0.11/share Thus beating the analyst Estimates with a Surprise Factor of 18.2 Percent. While, Roku, Inc. (NASDAQ:ROKU) reported EPS of $-0.09/share in the last quarter. The analysts projected EPS of $-0.12/share depicting a Surprise of 25 Percent.

Taking a look at Earnings per Share, Roku, Inc. tends to be beating the analyst estimates more than Square, Inc.. so ROKU is more profitable than SQ.

Technical Analysis of Square, Inc. & Roku, Inc.

Moving average convergence divergence (MACD) shows that Square, Inc. (NYSE:SQ) is on a PRICE RELATIVITY trend While Roku, Inc. (NASDAQ:ROKU) is on PRICE RELATIVITY trend. The trend for the past 10-days shows that the Square, Inc. was in BULLISH territory and Roku, Inc. was in BULLISH territory.

SQ’s current statistics gauge that the stock candle is BEARISH with HIGH volatility. While ROKU’s candle is BEARISH with HIGH.

EPS Growth Rate: SQ’s 54.04% versus ROKU’s 21%

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 Square, Inc. (NYSE:SQ) is predicted at 54.04% while Roku, Inc. (NASDAQ:ROKU) stands at 21%. These numbers suggest that SQ 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 SQ stands at 2.2 while ROKU is at 2.4 whereas the debt ratio of the prior is 0.99 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.

Analyst Recommendations

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 SQ and 2 for ROKU which means SQ has Hold rating whereas ROKU 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 SQ is $82.48 which is 8.79% of its current price while ROKU has price target of 68.42 which is 33.15% of its current price.

Valuation Ratios

Valuation is the process of determining the company’s worth for an investor, the valuation ratios give an insight to that worthiness.

SQ currently has price to earning P/E ratio of 0 whereas ROKU has 0 while the forward P/E ratio for the prior stands at 96.95 and for the later it depicts the value of 0.

The price to Book P/B for SQ is 28.07, Price to Sale is at 11.35 and for ROKU these ratios stand at 22.2 and 7.99.