The shares of CF Industries Holdings, Inc. (NYSE:CF) and 3M Company (NYSE:MMM) were among the active stocks of the last trading sessions. CF Industries Holdings, Inc. (NYSE:CF) soared to 0.22% closing at the price of $53.67 whereas the shares of 3M Company (NYSE:MMM) soared 1.38% with the increase of 2.78 points closing at the price of $204.07. CF Industries Holdings, Inc. has currently increase 35.87% in its stock over the period of 6-months while its rival 3M Company subtracted -0.53% 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 CF Industries Holdings, Inc. (NYSE:CF) is 3.1% while the ROI of 3M Company (NYSE:MMM) is 23.5%. Another figure that is to be considered while analyzing the profitability of a share is its EBITDA margin, CF’s EBITDA Margin is 13.06 whereas MMM’s is 14.58.
Both the profitability ratios suggest that 3M Company (NYSE:MMM) is more suitable investment in terms of profitability and return.
EPS & Surprise Factor
CF Industries Holdings, Inc. (NYSE:CF) reported $0.13/share EPS for the previous quarter where analysts were predicting an EPS to be $0.15/share Thus lagging the analyst Estimates with a Surprise Factor of -13.3 Percent. While, 3M Company (NYSE:MMM) reported EPS of $2.58/share in the last quarter. The analysts projected EPS of $2.7/share depicting a Surprise of -4.4 Percent.
Taking a look at Earnings per Share, 3M Company tends to be beating the analyst estimates more than CF Industries Holdings, Inc.. so MMM is more profitable than CF.
Technical Analysis of CF Industries Holdings, Inc. & 3M Company
Moving average convergence divergence (MACD) shows that CF Industries Holdings, Inc. (NYSE:CF) is on a PRICE RELATIVITY trend While 3M Company (NYSE:MMM) is on PRICE RELATIVITY trend. The trend for the past 10-days shows that the CF Industries Holdings, Inc. was in BULLISH territory and 3M Company was in BULLISH territory.
CF’s current statistics gauge that the stock candle is BULLISH with HIGH volatility. While MMM’s candle is BULLISH with HIGH.
EPS Growth Rate: CF’s 0% versus MMM’s 8.98%
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 CF Industries Holdings, Inc. (NYSE:CF) is predicted at 0% while 3M Company (NYSE:MMM) stands at 8.98%. These numbers suggest that MMM 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 CF stands at 2 while MMM is at 2 whereas the debt ratio of the prior is 0 while the debt ratio of the later is 1.45.
The values of the both ratios suggest that MMM 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 2.4 for CF and 2.7 for MMM which means CF has Hold rating whereas MMM 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 CF is $56.06 which is 4.26% of its current price while MMM has price target of 204 which is -0.03% 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.
CF currently has price to earning P/E ratio of 58.66 whereas MMM has 22.46 while the forward P/E ratio for the prior stands at 20.78 and for the later it depicts the value of 18.94.
The price to Book P/B for CF is 3.65, Price to Sale is at 2.93 and for MMM these ratios stand at 11.66 and 3.64.