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A Side-by-side Analysis of Agenus Inc. (AGEN) and Casa Systems, Inc. (CASA)

Agenus Inc. (NASDAQ:AGEN) shares are up more than 4.29% this year and recently increased 2.72% or $0.09 to settle at $3.40. Casa Systems, Inc. (NASDAQ:CASA), on the other hand, is up 18.58% year to date as of 05/16/2018. It currently trades at $21.06 and has returned -6.94% during the past week.

Agenus Inc. (NASDAQ:AGEN) and Casa Systems, Inc. (NASDAQ:CASA) are the two most active stocks in the Biotechnology industry based on today’s trading volumes. The market is clearly enthusiastic about both these stocks, but which is the better investment? To answer this, we will compare the two companies based on the strength of their growth, profitability, risk, returns, valuation, analyst recommendations, and insider trends.

Profitability and Returns

Growth doesn’t mean much if it comes at the cost of weak profitability. To adjust for differences in capital structure we’ll use EBITDA margin and Return on Investment (ROI) as measures of profitability and return. EBITDA margin of 29.8% for Casa Systems, Inc. (CASA). AGEN’s ROI is -119.00% while CASA has a ROI of 33.30%. The interpretation is that CASA’s business generates a higher return on investment than AGEN’s.

Cash Flow

The amount of free cash flow available to investors is ultimately what determines the value of a stock. AGEN’s free cash flow (“FCF”) per share for the trailing twelve months was -0.41. Comparatively, CASA’s free cash flow per share was +0.50. On a percent-of-sales basis, AGEN’s free cash flow was -0.1% while CASA converted 0.01% of its revenues into cash flow. This means that, for a given level of sales, CASA 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. AGEN has a current ratio of 1.30 compared to 4.20 for CASA. This means that CASA can more easily cover its most immediate liabilities over the next twelve months.

Valuation

AGEN trades at a P/S of 7.61, compared to a forward P/E of 15.12, a P/B of 36.31, and a P/S of 5.85 for CASA. 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. AGEN is currently priced at a -51.43% to its one-year price target of 7.00. Comparatively, CASA is -36.18% relative to its price target of 33.00. This suggests that AGEN is the better investment over the next year.

Insider Activity and Investor Sentiment

Comparing the number of shares sold short to the float is a method analysts often use to get a reading on investor sentiment. AGEN has a short ratio of 5.96 compared to a short interest of 1.38 for CASA. This implies that the market is currently less bearish on the outlook for CASA.

Summary

Casa Systems, Inc. (NASDAQ:CASA) beats Agenus Inc. (NASDAQ:AGEN) on a total of 9 of the 14 factors compared between the two stocks. CASA has lower financial risk, generates a higher return on investment, has higher cash flow per share, has a higher cash conversion rate and higher liquidity. Finally, CASA has better sentiment signals based on short interest.

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