The shares of British American Tobacco p.l.c. (NYSE:BTI) and Achaogen, Inc. (NASDAQ:AKAO) were among the active stocks of the last trading sessions. British American Tobacco p.l.c. (NYSE:BTI) declined to -3.45% closing at the price of $43.6 whereas the shares of Achaogen, Inc. (NASDAQ:AKAO) declined -13.96% with the decrease of -0.43 points closing at the price of $2.65. British American Tobacco p.l.c. has currently decrease -15.34% in its stock over the period of 6-months while its rival Achaogen, Inc. subtracted -78.93% 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 British American Tobacco p.l.c. (NYSE:BTI) is 4.5% while the ROI of Achaogen, Inc. (NASDAQ:AKAO) is -82%. Another figure that is to be considered while analyzing the profitability of a share is its EBITDA margin, BTI’s EBITDA Margin is 12.68 whereas AKAO’s is -0.66.
Both the profitability ratios suggest that British American Tobacco p.l.c. (NYSE:BTI) is more suitable investment in terms of profitability and return.
EPS & Surprise Factor
Technical Analysis of British American Tobacco p.l.c. & Achaogen, Inc.
Moving average convergence divergence (MACD) shows that British American Tobacco p.l.c. (NYSE:BTI) is on a PRICE RELATIVITY trend While Achaogen, Inc. (NASDAQ:AKAO) is on PRICE RELATIVITY trend. The trend for the past 10-days shows that the British American Tobacco p.l.c. was in BEARISH territory and Achaogen, Inc. was in BEARISH territory.
BTI’s current statistics gauge that the stock candle is BEARISH with MEDIUM volatility. While AKAO’s candle is BULLISH with HIGH.
EPS Growth Rate: BTI’s 10.4% versus AKAO’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 British American Tobacco p.l.c. (NYSE:BTI) is predicted at 10.4% while Achaogen, Inc. (NASDAQ:AKAO) stands at 0%. These numbers suggest that BTI 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 BTI stands at 0.8 while AKAO is at 3.8 whereas the debt ratio of the prior is 0.78 while the debt ratio of the later is 0.59.
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 1.7 for BTI and 2 for AKAO which means BTI has Buy rating whereas AKAO 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 BTI is $53.86 which is 19.05% of its current price while AKAO has price target of 15.56 which is 82.97% 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.
BTI currently has price to earning P/E ratio of 2.65 whereas AKAO has 0 while the forward P/E ratio for the prior stands at 10.83 and for the later it depicts the value of 0.
The price to Book P/B for BTI is 1.23, Price to Sale is at 3.3 and for AKAO these ratios stand at 2.02 and 17.49.