Editas Medicine, Inc. (NASDAQ:EDIT) shares are up more than 93.10% this year and recently increased 4.82% or $1.44 to settle at $31.34. GlycoMimetics, Inc. (NASDAQ:GLYC), on the other hand, is up 179.02% year to date as of 12/28/2017. It currently trades at $17.02 and has returned 8.55% during the past week.
Editas Medicine, Inc. (NASDAQ:EDIT) and GlycoMimetics, Inc. (NASDAQ:GLYC) are the two most active stocks in the Biotechnology industry based on today’s trading volumes. We will compare the two companies based on the strength of various metrics, including growth, profitability, risk, return, and valuation to determine if one is a better investment than the other.
Earnings don’t always accurately reflect the amount of cash that a company brings in. EDIT’s free cash flow (“FCF”) per share for the trailing twelve months was -0.70. Comparatively, GLYC’s free cash flow per share was -0.19. On a percent-of-sales basis, EDIT’s free cash flow was -0.51% while GLYC converted -32.76% of its revenues into cash flow. This means that, for a given level of sales, EDIT is able to generate more free cash flow for investors.
Liquidity and Financial Risk
Liquidity and leverage ratios measure a company’s ability to meet short-term obligations and longer-term debts. EDIT has a current ratio of 10.10 compared to 17.40 for GLYC. This means that GLYC can more easily cover its most immediate liabilities over the next twelve months. EDIT’s debt-to-equity ratio is 0.00 versus a D/E of 0.00 for GLYC. EDIT is therefore the more solvent of the two companies, and has lower financial risk.
EDIT trades at a P/B of 7.29, and a P/S of 112.74, compared to a P/B of 5.13, for GLYC. Given that earnings are what matter most to investors, analysts tend to place a greater weight on the P/E.
Analyst Price Targets and Opinions
When investing it’s crucial to distinguish between price and value. As Warren Buffet said, “price is what you pay, value is what you get”. EDIT is currently priced at a -5.23% to its one-year price target of 33.07. Comparatively, GLYC is -32.59% relative to its price target of 25.25. This suggests that GLYC is the better investment over the next year.
The average investment recommendation on a scale of 1 to 5 (1 being a strong buy, 3 a hold, and 5 a sell) is 2.50 for EDIT and 1.60 for GLYC, which implies that analysts are more bullish on the outlook for EDIT.
Insider Activity and Investor Sentiment
The analysis of insider buying and selling trends can be extended to the aggregate level. Short interest, which represents the percentage of a stock’s tradable shares currently being shorted, captures what the market as a whole feels about a stock. EDIT has a short ratio of 4.60 compared to a short interest of 5.78 for GLYC. This implies that the market is currently less bearish on the outlook for EDIT.
GlycoMimetics, Inc. (NASDAQ:GLYC) beats Editas Medicine, Inc. (NASDAQ:EDIT) on a total of 8 of the 14 factors compared between the two stocks. GLYC has a higher cash conversion rate, has higher cash flow per share, higher liquidity and has lower financial risk. In terms of valuation, GLYC is the cheaper of the two stocks on book value and sales basis, GLYC is more undervalued relative to its price target. Finally, ABEO has better sentiment signals based on short interest.