The shares of Valero Energy Corporation (NYSE:VLO) and ON Semiconductor Corporation (NASDAQ:ON) were among the active stocks of the last trading sessions. Valero Energy Corporation (NYSE:VLO) declined to -4.2% closing at the price of $88.7 whereas the shares of ON Semiconductor Corporation (NASDAQ:ON) soared 0.11% with the increase of 0.02 points closing at the price of $18.4. Valero Energy Corporation has currently decrease -22.62% in its stock over the period of 6-months while its rival ON Semiconductor Corporation subtracted -21.33% 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 Valero Energy Corporation (NYSE:VLO) is 8.7% while the ROI of ON Semiconductor Corporation (NASDAQ:ON) is 8.1%. Another figure that is to be considered while analyzing the profitability of a share is its EBITDA margin, VLO’s EBITDA Margin is 7.06 whereas ON’s is 7.02.
Both the profitability ratios suggest that Valero Energy Corporation (NYSE:VLO) is more suitable investment in terms of profitability and return.
EPS & Surprise Factor
Valero Energy Corporation (NYSE:VLO) reported $2.01/share EPS for the previous quarter where analysts were predicting an EPS to be $1.95/share Thus beating the analyst Estimates with a Surprise Factor of 3.1 Percent. While, ON Semiconductor Corporation (NASDAQ:ON) reported EPS of $0.57/share in the last quarter. The analysts projected EPS of $0.51/share depicting a Surprise of 11.8 Percent.
Taking a look at Earnings per Share, ON Semiconductor Corporation tends to be beating the analyst estimates more than Valero Energy Corporation. so ON is more profitable than VLO.
Technical Analysis of Valero Energy Corporation & ON Semiconductor Corporation
Moving average convergence divergence (MACD) shows that Valero Energy Corporation (NYSE:VLO) is on a PRICE RELATIVITY trend While ON Semiconductor Corporation (NASDAQ:ON) is on PRICE RELATIVITY trend. The trend for the past 10-days shows that the Valero Energy Corporation was in BULLISH territory and ON Semiconductor Corporation was in BULLISH territory.
VLO’s current statistics gauge that the stock candle is BEARISH with MEDIUM volatility. While ON’s candle is BULLISH with HIGH.
EPS Growth Rate: VLO’s 43.81% versus ON’s 12.79%
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 Valero Energy Corporation (NYSE:VLO) is predicted at 43.81% while ON Semiconductor Corporation (NASDAQ:ON) stands at 12.79%. These numbers suggest that VLO 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 VLO stands at 1.7 while ON is at 2.4 whereas the debt ratio of the prior is 0.42 while the debt ratio of the later is 0.85.
The values of the both ratios suggest that ON 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 2.2 for VLO and 2.3 for ON which means VLO has Hold rating whereas ON has Hold 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 VLO is $125 which is 29.04% of its current price while ON has price target of 22.24 which is 17.27% 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.
VLO currently has price to earning P/E ratio of 14.53 whereas ON has 14.94 while the forward P/E ratio for the prior stands at 8.97 and for the later it depicts the value of 9.65.
The price to Book P/B for VLO is 1.75, Price to Sale is at 0.36 and for ON these ratios stand at 2.46 and 1.37.