United Continental Holdings, Inc. (NYSE:UAL) shares are up more than 0.93% this year and recently increased 2.09% or $1.39 to settle at $68.03. Celldex Therapeutics, Inc. (NASDAQ:CLDX), on the other hand, is down -75.15% year to date as of 05/15/2018. It currently trades at $0.71 and has returned -5.92% during the past week.
United Continental Holdings, Inc. (NYSE:UAL) and Celldex Therapeutics, Inc. (NASDAQ:CLDX) are the two most active stocks in the Major Airlines industry based on today’s trading volumes. Investors are clearly interested in the two names, but is one a better choice than the other? We will compare the two companies across growth, profitability, risk, valuation, and insider trends to answer this question.Growth
The ability to grow earnings at a compound rate over time is a crucial determinant of investment value. Analysts expect UAL to grow earnings at a 18.44% annual rate over the next 5 years.Profitability and Returns
A high growth rate isn’t necessarily valuable to investors. In fact, companies that overinvest in low return projects just to achieve a high growth rate can actually destroy shareholder value. Profitability and returns are a measure of the quality of a company’s business and its growth opportunities. We’ll use EBITDA margin and Return on Investment (ROI) to measure this. United Continental Holdings, Inc. (UAL) has an EBITDA margin of 13.73%. This suggests that UAL underlying business is more profitable UAL’s ROI is 10.50% while CLDX has a ROI of -49.20%. The interpretation is that UAL’s business generates a higher return on investment than CLDX’s.Cash Flow
Earnings don’t always accurately reflect the amount of cash that a company brings in. UAL’s free cash flow (“FCF”) per share for the trailing twelve months was +2.65. Comparatively, CLDX’s free cash flow per share was -0.20. On a percent-of-sales basis, UAL’s free cash flow was 1.95% while CLDX converted -0.23% of its revenues into cash flow. This means that, for a given level of sales, UAL is able to generate more free cash flow for investors.Liquidity and Financial Risk
Balance sheet risk is one of the biggest factors to consider before investing. UAL has a current ratio of 0.60 compared to 5.50 for CLDX. This means that CLDX can more easily cover its most immediate liabilities over the next twelve months. UAL’s debt-to-equity ratio is 1.80 versus a D/E of 0.00 for CLDX. UAL is therefore the more solvent of the two companies, and has lower financial risk.Valuation
UAL trades at a forward P/E of 7.37, a P/B of 2.32, and a P/S of 0.50, compared to a P/B of 0.74, and a P/S of 6.91 for CLDX. UAL is the cheaper of the two stocks on sales basis but is expensive in terms of P/E and P/B ratio. 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”. UAL is currently priced at a -19.14% to its one-year price target of 84.13. Comparatively, CLDX is -82.81% relative to its price target of 4.13. This suggests that CLDX 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. UAL has a beta of 0.85 and CLDX’s beta is 2.48. UAL’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. UAL has a short ratio of 3.82 compared to a short interest of 2.76 for CLDX. This implies that the market is currently less bearish on the outlook for CLDX.Summary
United Continental Holdings, Inc. (NYSE:UAL) beats Celldex Therapeutics, Inc. (NASDAQ:CLDX) on a total of 8 of the 14 factors compared between the two stocks. UAL is growing fastly, is more profitable, generates a higher return on investment, has higher cash flow per share and has a higher cash conversion rate. Finally, ISRG has better sentiment signals based on short interest.