Entercom Communications Corp. (NYSE:ETM) shares are down more than -28.24% this year and recently increased 6.16% or $0.45 to settle at $7.75. EyeGate Pharmaceuticals, Inc. (NASDAQ:EYEG), on the other hand, is down -45.33% year to date as of 05/15/2018. It currently trades at $0.59 and has returned 20.62% during the past week.
Entercom Communications Corp. (NYSE:ETM) and EyeGate Pharmaceuticals, Inc. (NASDAQ:EYEG) are the two most active stocks in the Broadcasting – Radio 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. Analysts expect ETM to grow earnings at a 2.00% annual rate over the next 5 years.Profitability and Returns
Growth isn’t very attractive to investors if companies are sacrificing profitability and shareholder returns to achieve that growth. We will use EBITDA margin and Return on Investment (ROI), which control for differences in capital structure between the two companies, to measure profitability and return. Entercom Communications Corp. (ETM) has an EBITDA margin of 6.5%. This suggests that ETM underlying business is more profitable ETM’s ROI is -0.70% while EYEG has a ROI of 695.60%. The interpretation is that EYEG’s business generates a higher return on investment than ETM’s.Cash Flow
If there’s one thing investors care more about than earnings, it’s cash flow. On a percent-of-sales basis, ETM’s free cash flow was 0% while EYEG converted -3.09% of its revenues into cash flow. This means that, for a given level of sales, ETM 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. ETM has a current ratio of 1.60 compared to 1.20 for EYEG. This means that ETM can more easily cover its most immediate liabilities over the next twelve months. ETM’s debt-to-equity ratio is 1.08 versus a D/E of 0.00 for EYEG. ETM is therefore the more solvent of the two companies, and has lower financial risk.Valuation
ETM trades at a forward P/E of 5.64, a P/B of 0.63, and a P/S of 1.42, compared to a P/B of 1.89, and a P/S of 25.24 for EYEG. 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
A cheap stock isn’t a good investment if the stock is priced accurately. To get a sense of “value” we must compare the current price to some measure of intrinsic value such as a price target. ETM is currently priced at a -43.31% to its one-year price target of 13.67. Comparatively, EYEG is -89.59% relative to its price target of 5.67. This suggests that EYEG is the better investment over the next year.
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. ETM has a short ratio of 7.19 compared to a short interest of 0.73 for EYEG. This implies that the market is currently less bearish on the outlook for EYEG.Summary
Entercom Communications Corp. (NYSE:ETM) beats EyeGate Pharmaceuticals, Inc. (NASDAQ:EYEG) on a total of 7 of the 14 factors compared between the two stocks. ETM is growing fastly, is more profitable, has higher cash flow per share, has a higher cash conversion rate and higher liquidity. In terms of valuation, ETM is the cheaper of the two stocks on book value and sales basis, Finally, LGCY has better sentiment signals based on short interest.