ImmunoGen, Inc. (NASDAQ:IMGN) shares are up more than 61.15% this year and recently decreased -4.70% or -$0.51 to settle at $10.33. Amira Nature Foods Ltd. (NYSE:ANFI), on the other hand, is down -41.97% year to date as of 05/15/2018. It currently trades at $2.42 and has returned -24.37% during the past week.
ImmunoGen, Inc. (NASDAQ:IMGN) and Amira Nature Foods Ltd. (NYSE:ANFI) are the two most active stocks in the Biotechnology industry based on today’s trading volumes. To determine if one is a better investment than the other, we will compare the two companies’ growth, profitability, risk, return, and valuation characteristics, as well as their analyst ratings and sentiment signals.Growth
Companies that can consistently grow earnings at a high compound rate usually have the greatest potential to create value for shareholders in the long-run. Comparatively, ANFI is expected to grow at a 25.00% annual rate. All else equal, ANFI’s higher growth rate would imply a greater potential for capital appreciation.Profitability and Returns
Just, if not more, important than the growth rate is the quality of that growth. Growth can actual be harmful to investors if it comes at the cost of weak profitability and low returns. To adjust for differences in capital structure we’ll use Return on Investment (ROI) as measures of profitability and return. IMGN’s ROI is 371.00% while ANFI has a ROI of 16.20%. The interpretation is that IMGN’s business generates a higher return on investment than ANFI’s.Cash Flow
The value of a stock is simply the present value of its future free cash flows. IMGN’s free cash flow (“FCF”) per share for the trailing twelve months was -0.39. Comparatively, ANFI’s free cash flow per share was -0.09. On a percent-of-sales basis, IMGN’s free cash flow was -0.04% while ANFI converted -0% of its revenues into cash flow. This means that, for a given level of sales, ANFI 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. IMGN has a current ratio of 5.00 compared to 2.20 for ANFI. This means that IMGN can more easily cover its most immediate liabilities over the next twelve months.Valuation
IMGN trades at a P/S of 12.24, compared to a forward P/E of 2.12, a P/B of 0.34, and a P/S of 0.19 for ANFI. 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
Investors often compare a stock’s current price to an analyst price target to get a sense of the potential upside within the next year. IMGN is currently priced at a -21.39% to its one-year price target of 13.14. Comparatively, ANFI is -59.67% relative to its price target of 6.00. This suggests that ANFI is the better investment over the next year.
Risk and Volatility
Beta is an important measure that gives investors a sense of the market risk associated with a particular stock. A beta above 1 signals above average market risk, while a beta below 1 implies below average volatility. IMGN has a beta of 2.09 and ANFI’s beta is -0.38. ANFI’s shares are therefore the less volatile of the two stocks.Insider Activity and Investor Sentiment
Analysts often look at short interest, or the percentage of a company’s float currently being shorted by investors, to aid in their outlook for a particular stock. IMGN has a short ratio of 4.68 compared to a short interest of 5.86 for ANFI. This implies that the market is currently less bearish on the outlook for IMGN.Summary
Amira Nature Foods Ltd. (NYSE:ANFI) beats ImmunoGen, Inc. (NASDAQ:IMGN) on a total of 7 of the 14 factors compared between the two stocks. ANFI generates a higher return on investment, has higher cash flow per share and has a higher cash conversion rate. ANFI is more undervalued relative to its price target. Finally, PHM has better sentiment signals based on short interest.