The shares of Cognizant Technology Solutions Corporation (NASDAQ:CTSH) and GNC Holdings, Inc. (NYSE:GNC) were among the active stocks of the last trading sessions. Cognizant Technology Solutions Corporation (NASDAQ:CTSH) declined to -0.18% closing at the price of $71.24 whereas the shares of GNC Holdings, Inc. (NYSE:GNC) declined -1.61% with the decrease of -0.07 points closing at the price of $4.29. Cognizant Technology Solutions Corporation has currently decrease -6.97% in its stock over the period of 6-months while its rival GNC Holdings, Inc. added 30% 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 Cognizant Technology Solutions Corporation (NASDAQ:CTSH) is 16.9% while the ROI of GNC Holdings, Inc. (NYSE:GNC) is -15.8%. Another figure that is to be considered while analyzing the profitability of a share is its EBITDA margin, CTSH’s EBITDA Margin is 12.21 whereas GNC’s is 6.8.
Both the profitability ratios suggest that Cognizant Technology Solutions Corporation (NASDAQ:CTSH) is more suitable investment in terms of profitability and return.
EPS & Surprise Factor
Cognizant Technology Solutions Corporation (NASDAQ:CTSH) reported $1.19/share EPS for the previous quarter where analysts were predicting an EPS to be $1.13/share Thus beating the analyst Estimates with a Surprise Factor of 5.3 Percent. While, GNC Holdings, Inc. (NYSE:GNC) reported EPS of $0.2/share in the last quarter. The analysts projected EPS of $0.15/share depicting a Surprise of 33.3 Percent.
Taking a look at Earnings per Share, GNC Holdings, Inc. tends to be beating the analyst estimates more than Cognizant Technology Solutions Corporation. so GNC is more profitable than CTSH.
Technical Analysis of Cognizant Technology Solutions Corporation & GNC Holdings, Inc.
Moving average convergence divergence (MACD) shows that Cognizant Technology Solutions Corporation (NASDAQ:CTSH) is on a PRICE RELATIVITY trend While GNC Holdings, Inc. (NYSE:GNC) is on PRICE RELATIVITY trend. The trend for the past 10-days shows that the Cognizant Technology Solutions Corporation was in BULLISH territory and GNC Holdings, Inc. was in BULLISH territory.
CTSH’s current statistics gauge that the stock candle is BEARISH with HIGH volatility. While GNC’s candle is BEARISH with HIGH.
EPS Growth Rate: CTSH’s 13.6% versus GNC’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 Cognizant Technology Solutions Corporation (NASDAQ:CTSH) is predicted at 13.6% while GNC Holdings, Inc. (NYSE:GNC) stands at 0%. These numbers suggest that CTSH 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 CTSH stands at 3.2 while GNC is at 1.5 whereas the debt ratio of the prior is 0.07 while the debt ratio of the later is 0.
The values of the both ratios suggest that CTSH 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 2.1 for CTSH and 2.8 for GNC which means CTSH has Hold rating whereas GNC 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 CTSH is $84.23 which is 15.42% of its current price while GNC has price target of 4.33 which is 0.92% 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.
CTSH currently has price to earning P/E ratio of 20.41 whereas GNC has 0 while the forward P/E ratio for the prior stands at 14.13 and for the later it depicts the value of 10.41.
The price to Book P/B for CTSH is 3.76, Price to Sale is at 2.61 and for GNC these ratios stand at 0 and 0.15.