Earnings

A Comparison of Top Movers: Immersion Corporation (IMMR), Intellia Therapeutics, Inc. (NTLA)

The shares of Immersion Corporation have increased by more than 89.80% this year alone. The shares recently went up by 2.84% or $0.37 and now trades at $13.40. The shares of Intellia Therapeutics, Inc. (NASDAQ:NTLA), has jumped by 31.58% year to date as of 05/15/2018. The shares currently trade at $25.29 and have been able to report a change of 13.71% over the past one week.

The stock of Immersion Corporation and Intellia Therapeutics, Inc. were two of the most active stocks on Tueday. Investors seem to be very interested in what happens to the stocks of these two companies but do investors favor one over the other? We will analyze the growth, profitability, risk, valuation, and insider trends of both companies and see which one investors prefer.

Next 5Y EPS Growth: 15.00% versus 30.00%

When a company is able to grow consistently in terms of earnings at a high compound rate have the highest likelihood of creating value for its shareholders over time. Analysts have predicted that IMMR will grow it’s earning at a 15.00% annual rate in the next 5 years. This is in contrast to NTLA which will have a positive growth at a 30.00% annual rate. This means that the higher growth rate of NTLA implies a greater potential for capital appreciation over the years.

Profitability and Returns

Growth alone cannot be used to see if the company will be valuable. Shareholders will be the losers if a company invest in ventures that aren’t profitable enough to support upbeat growth. In order for us to accurately measure profitability and return, we will be using the EBITDA margin and Return on Investment (ROI), which balances the difference in capital structure. IMMR has an EBITDA margin of 34.95%, this implies that the underlying business of IMMR is more profitable. The ROI of IMMR is -340.20% while that of NTLA is -23.10%. These figures suggest that NTLA ventures generate a higher ROI than that of IMMR.

Cash Flow



The value of a stock is ultimately determined by the amount of cash flow that the investors have available. Over the last 12 months, IMMR’s free cash flow per share is a positive 0, while that of NTLA is negative -0.08.

Liquidity and Financial Risk

The ability of a company to meet up with its short-term obligations and be able to clear its longer-term debts is measured using Liquidity and leverage ratios. The current ratio for IMMR is 2.50 and that of NTLA is 13.20. This implies that it is easier for IMMR to cover its immediate obligations over the next 12 months than NTLA. The debt ratio of IMMR is 0.00 compared to 0.00 for NTLA. NTLA can be able to settle its long-term debts and thus is a lower financial risk than IMMR.

Valuation

IMMR currently trades at a forward P/E of 9.75, a P/B of 40.61, and a P/S of 11.20 while NTLA trades at a P/B of 3.60, and a P/S of 38.11. This means that looking at the earnings, book values and sales basis, IMMR is the cheaper one. It is very obvious that earnings are the most important factors to investors, thus analysts are most likely to place their bet on the P/E.

Analyst Price Targets and Opinions




The mistake some people make is that they think a cheap stock has more value to it. In order to know the value of a stock, there is need to compare its current price to its likely trading price in the future. The price of IMMR is currently at a -9.15% to its one-year price target of 14.75. Looking at its rival pricing, NTLA is at a -37.45% relative to its price target of 40.43.

When looking at the investment recommendation on say a scale of 1 to 5 (1 being a strong buy, 3 a hold, and 5 a sell), IMMR is given a 1.70 while 1.90 placed for NTLA. This means that analysts are more bullish on the outlook for NTLA stocks.

Insider Activity and Investor Sentiment

Short interest or otherwise called the percentage of a stock’s tradable shares currently being shorted is another data that investors use to get a handle on sentiment. The short ratio for IMMR is 3.60 while that of NTLA is just 4.27. This means that analysts are more bullish on the forecast for IMMR stock.

Conclusion

The stock of Immersion Corporation defeats that of Intellia Therapeutics, Inc. when the two are compared, with IMMR taking 6 out of the total factors that were been considered. IMMR happens to be more profitable, generates a higher ROI, has higher cash flow per share, higher liquidity and has a lower financial risk. When looking at the stock valuation, IMMR is the cheaper one on an earnings, book value and sales basis. Finally, the sentiment signal for IMMR is better on when it is viewed on short interest.

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