The shares of Omnicom Group Inc. (NYSE:OMC) and CDK Global, Inc. (NASDAQ:CDK) were among the active stocks of the last trading sessions. Omnicom Group Inc. (NYSE:OMC) soared to 0.17% closing at the price of $76.04 whereas the shares of CDK Global, Inc. (NASDAQ:CDK) declined -3.63% with the decrease of -1.92 points closing at the price of $51.03. Omnicom Group Inc. has currently increase 1.28% in its stock over the period of 6-months while its rival CDK Global, Inc. subtracted -20.85% 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 Omnicom Group Inc. (NYSE:OMC) is 19.5% while the ROI of CDK Global, Inc. (NASDAQ:CDK) is 20.1%. Another figure that is to be considered while analyzing the profitability of a share is its EBITDA margin, OMC’s EBITDA Margin is 8.79 whereas CDK’s is 12.9.
Both the profitability ratios suggest that CDK Global, Inc. (NASDAQ:CDK) is more suitable investment in terms of profitability and return.
EPS & Surprise Factor
Omnicom Group Inc. (NYSE:OMC) reported $1.24/share EPS for the previous quarter where analysts were predicting an EPS to be $1.21/share Thus beating the analyst Estimates with a Surprise Factor of 2.5 Percent. While, CDK Global, Inc. (NASDAQ:CDK) reported EPS of $0.89/share in the last quarter. The analysts projected EPS of $0.88/share depicting a Surprise of 1.1 Percent.
Taking a look at Earnings per Share, Omnicom Group Inc. tends to be beating the analyst estimates more than CDK Global, Inc.. so OMC is more profitable than CDK.
Technical Analysis of Omnicom Group Inc. & CDK Global, Inc.
Moving average convergence divergence (MACD) shows that Omnicom Group Inc. (NYSE:OMC) is on a PRICE RELATIVITY trend While CDK Global, Inc. (NASDAQ:CDK) is on PRICE RELATIVITY trend. The trend for the past 10-days shows that the Omnicom Group Inc. was in BULLISH territory and CDK Global, Inc. was in BEARISH territory.
OMC’s current statistics gauge that the stock candle is BEARISH with MEDIUM volatility. While CDK’s candle is BEARISH with HIGH.
EPS Growth Rate: OMC’s 6.8% versus CDK’s 10%
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 Omnicom Group Inc. (NYSE:OMC) is predicted at 6.8% while CDK Global, Inc. (NASDAQ:CDK) stands at 10%. These numbers suggest that CDK 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 OMC stands at 0.9 while CDK is at 2.5 whereas the debt ratio of the prior is 2.04 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 3.1 for OMC and 1.8 for CDK which means OMC has Sell rating whereas CDK 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 OMC is $74.87 which is -1.56% of its current price while CDK has price target of 77.6 which is 34.24% 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.
OMC currently has price to earning P/E ratio of 13.25 whereas CDK has 19.22 while the forward P/E ratio for the prior stands at 13.16 and for the later it depicts the value of 11.16.
The price to Book P/B for OMC is 7.18, Price to Sale is at 1.11 and for CDK these ratios stand at 0 and 2.89.