Which Stock is more profitable?  Alaska Air Group, Inc. (ALK) or Scientific Games Corp (SGMS)

The shares of Alaska Air Group, Inc. (NYSE:ALK) and Scientific Games Corp (NASDAQ:SGMS) were among the active stocks of the last trading sessions.  Alaska Air Group, Inc. (NYSE:ALK) declined to -4.13% closing at the price of $62.61 whereas the shares of Scientific Games Corp (NASDAQ:SGMS) soared 9.79% with the increase of 2.2 points closing at the price of $24.67.  Alaska Air Group, Inc. has currently increase 6.01% in its stock over the period of 6-months while its rival Scientific Games Corp subtracted -41.26% 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 Alaska Air Group, Inc. (NYSE:ALK) is 13.4% while the ROI of Scientific Games Corp (NASDAQ:SGMS) is 4.9%.  Another figure that is to be considered while analyzing the profitability of a share is its EBITDA margin, ALK’s EBITDA Margin is 6.48 whereas SGMS’s is 10.83. 

Both the profitability ratios suggest a mixed sentiment for Alaska Air Group, Inc. (NYSE:ALK) and Scientific Games Corp (NASDAQ:SGMS). 

EPS & Surprise Factor

Alaska Air Group, Inc. (NYSE:ALK) reported $1.66/share EPS for the previous quarter where analysts were predicting an EPS to be $1.63/share Thus beating the analyst Estimates with a Surprise Factor of 1.8 Percent.  While, Scientific Games Corp (NASDAQ:SGMS) reported EPS of $-0.06/share in the last quarter.  The analysts projected EPS of $-0.05/share depicting a Surprise of -20 Percent. 

Taking a look at Earnings per Share, Alaska Air Group, Inc. tends to be beating the analyst estimates more than Scientific Games Corp. so ALK is more profitable than SGMS. 

Technical Analysis of Alaska Air Group, Inc. & Scientific Games Corp

Moving average convergence divergence (MACD) shows that Alaska Air Group, Inc. (NYSE:ALK) is on a PRICE RELATIVITY trend While Scientific Games Corp (NASDAQ:SGMS) is on PRICE RELATIVITY trend.  The trend for the past 10-days shows that the Alaska Air Group, Inc. was in BEARISH territory and Scientific Games Corp was in BEARISH territory. 

ALK’s current statistics gauge that the stock candle is BEARISH with HIGH volatility.  While SGMS’s candle is BULLISH with HIGH. 

EPS Growth Rate: ALK’s 8.09% versus SGMS’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 Alaska Air Group, Inc. (NYSE:ALK) is predicted at 8.09% while Scientific Games Corp (NASDAQ:SGMS) stands at 0%.  These numbers suggest that ALK 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 ALK stands at 0.7 while SGMS is at 1.9 whereas the debt ratio of the prior is 0.64 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. 

Analyst Recommendations

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 ALK and 2.5 for SGMS which means ALK has Hold rating whereas SGMS 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 ALK is $77.77 which is 19.49% of its current price while SGMS has price target of 45.56 which is 45.85% of its current price. 

Valuation Ratios

Valuation is the process of determining the company’s worth for an investor, the valuation ratios give an insight to that worthiness. 

ALK currently has price to earning P/E ratio of 13.94 whereas SGMS has 0 while the forward P/E ratio for the prior stands at 10.48 and for the later it depicts the value of 36.12. 

The price to Book P/B for ALK is 2.15, Price to Sale is at 0.97 and for SGMS these ratios stand at 0 and 0.74.