The shares of Applied Materials, Inc. (NASDAQ:AMAT) and Callon Petroleum Company (NYSE:CPE) were among the active stocks of the last trading sessions. Applied Materials, Inc. (NASDAQ:AMAT) declined to -0.88% closing at the price of $34.94 whereas the shares of Callon Petroleum Company (NYSE:CPE) declined -4.69% with the decrease of -0.52 points closing at the price of $10.56. Applied Materials, Inc. has currently decrease -36.29% in its stock over the period of 6-months while its rival Callon Petroleum Company subtracted -24.03% 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 Applied Materials, Inc. (NASDAQ:AMAT) is 24.4% while the ROI of Callon Petroleum Company (NYSE:CPE) is 5.7%. Another figure that is to be considered while analyzing the profitability of a share is its EBITDA margin, AMAT’s EBITDA Margin is 6.44 whereas CPE’s is 10.05.
Both the profitability ratios suggest a mixed sentiment for Applied Materials, Inc. (NASDAQ:AMAT) and Callon Petroleum Company (NYSE:CPE).
EPS & Surprise Factor
Applied Materials, Inc. (NASDAQ:AMAT) reported $1.2/share EPS for the previous quarter where analysts were predicting an EPS to be $1.17/share Thus beating the analyst Estimates with a Surprise Factor of 2.6 Percent. While, Callon Petroleum Company (NYSE:CPE) reported EPS of $0.21/share in the last quarter. The analysts projected EPS of $0.2/share depicting a Surprise of 5 Percent.
Taking a look at Earnings per Share, Callon Petroleum Company tends to be beating the analyst estimates more than Applied Materials, Inc.. so CPE is more profitable than AMAT.
Technical Analysis of Applied Materials, Inc. & Callon Petroleum Company
Moving average convergence divergence (MACD) shows that Applied Materials, Inc. (NASDAQ:AMAT) is on a PRICE RELATIVITY trend While Callon Petroleum Company (NYSE:CPE) is on PRICE RELATIVITY trend. The trend for the past 10-days shows that the Applied Materials, Inc. was in BULLISH territory and Callon Petroleum Company was in BULLISH territory.
AMAT’s current statistics gauge that the stock candle is BULLISH with HIGH volatility. While CPE’s candle is BEARISH with HIGH.
EPS Growth Rate: AMAT’s 13.45% versus CPE’s 51.37%
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 Applied Materials, Inc. (NASDAQ:AMAT) is predicted at 13.45% while Callon Petroleum Company (NYSE:CPE) stands at 51.37%. These numbers suggest that CPE 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 AMAT stands at 2.5 while CPE is at 2.6 whereas the debt ratio of the prior is 0 while the debt ratio of the later is 0.44.
The values of the both ratios suggest that CPE 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 for AMAT and 1.9 for CPE which means AMAT has Buy rating whereas CPE 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 AMAT is $54.91 which is 36.37% of its current price while CPE has price target of 17.23 which is 38.71% 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.
AMAT currently has price to earning P/E ratio of 8.1 whereas CPE has 15.64 while the forward P/E ratio for the prior stands at 8.54 and for the later it depicts the value of 7.88.
The price to Book P/B for AMAT is 5.09, Price to Sale is at 2 and for CPE these ratios stand at 0.99 and 5.18.