The shares of Perrigo Company (NYSE:PRGO) and Zynga Inc. (NASDAQ:ZNGA) were among the active stocks of the last trading sessions. Perrigo Company (NYSE:PRGO) declined to -16.32% closing at the price of $62.88 whereas the shares of Zynga Inc. (NASDAQ:ZNGA) declined -2.57% with the decrease of -0.1 points closing at the price of $3.79. Perrigo Company has currently decrease -18.89% in its stock over the period of 6-months while its rival Zynga Inc. subtracted -4.29% 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 Perrigo Company (NYSE:PRGO) is 3.3% while the ROI of Zynga Inc. (NASDAQ:ZNGA) is 1.2%. Another figure that is to be considered while analyzing the profitability of a share is its EBITDA margin, PRGO’s EBITDA Margin is 11.95 whereas ZNGA’s is 38.29.
Both the profitability ratios suggest a mixed sentiment for Perrigo Company (NYSE:PRGO) and Zynga Inc. (NASDAQ:ZNGA).
EPS & Surprise Factor
Perrigo Company (NYSE:PRGO) reported $1.09/share EPS for the previous quarter where analysts were predicting an EPS to be $1.01/share Thus beating the analyst Estimates with a Surprise Factor of 7.9 Percent. While, Zynga Inc. (NASDAQ:ZNGA) reported EPS of $0.05/share in the last quarter. The analysts projected EPS of $0.04/share depicting a Surprise of 25 Percent.
Taking a look at Earnings per Share, Zynga Inc. tends to be beating the analyst estimates more than Perrigo Company. so ZNGA is more profitable than PRGO.
Technical Analysis of Perrigo Company & Zynga Inc.
Moving average convergence divergence (MACD) shows that Perrigo Company (NYSE:PRGO) is on a PRICE RELATIVITY trend While Zynga Inc. (NASDAQ:ZNGA) is on PRICE RELATIVITY trend. The trend for the past 10-days shows that the Perrigo Company was in BULLISH territory and Zynga Inc. was in BULLISH territory.
PRGO’s current statistics gauge that the stock candle is BEARISH with HIGH volatility. While ZNGA’s candle is BEARISH with MEDIUM.
EPS Growth Rate: PRGO’s 5% versus ZNGA’s 30%
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 Perrigo Company (NYSE:PRGO) is predicted at 5% while Zynga Inc. (NASDAQ:ZNGA) stands at 30%. These numbers suggest that ZNGA 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 PRGO stands at 1.8 while ZNGA is at 2 whereas the debt ratio of the prior is 0.56 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.
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 2.6 for PRGO and 2.4 for ZNGA which means PRGO has Hold rating whereas ZNGA 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 PRGO is $81.55 which is 22.89% of its current price while ZNGA has price target of 4.71 which is 19.53% 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.
PRGO currently has price to earning P/E ratio of 35.53 whereas ZNGA has 111.47 while the forward P/E ratio for the prior stands at 11.94 and for the later it depicts the value of 22.97.
The price to Book P/B for PRGO is 1.47, Price to Sale is at 1.78 and for ZNGA these ratios stand at 2.04 and 3.56.