MiMedx Group, Inc. (NASDAQ:MDXG) shares are down more than -41.87% this year and recently increased 4.71% or $0.33 to settle at $7.33. Express, Inc. (NYSE:EXPR), on the other hand, is down -10.25% year to date as of 05/16/2018. It currently trades at $9.11 and has returned 8.71% during the past week.
MiMedx Group, Inc. (NASDAQ:MDXG) and Express, Inc. (NYSE:EXPR) are the two most active stocks in the Medical Appliances & Equipment 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
The ability to consistently grow earnings at a high compound rate is a defining characteristic of the best companies for long-term investment. Analysts expect MDXG to grow earnings at a 15.00% annual rate over the next 5 years. Comparatively, EXPR is expected to grow at a 12.00% annual rate. All else equal, MDXG’s higher growth rate would imply a greater potential for capital appreciation.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. , compared to an EBITDA margin of 5.64% for Express, Inc. (EXPR). MDXG’s ROI is 9.30% while EXPR has a ROI of 2.70%. The interpretation is that MDXG’s business generates a higher return on investment than EXPR’s.Cash Flow
The amount of free cash flow available to investors is ultimately what determines the value of a stock. MDXG’s free cash flow (“FCF”) per share for the trailing twelve months was +0.14. Comparatively, EXPR’s free cash flow per share was +0.71. On a percent-of-sales basis, MDXG’s free cash flow was 0.01% while EXPR converted 2.5% of its revenues into cash flow. This means that, for a given level of sales, EXPR is able to generate more free cash flow for investors.Liquidity and Financial Risk
Liquidity and leverage ratios provide insight into the financial health of a company, and allow investors to determine the likelihood that the company will be able to continue operating as a going concern. MDXG has a current ratio of 3.20 compared to 1.90 for EXPR. This means that MDXG can more easily cover its most immediate liabilities over the next twelve months. MDXG’s debt-to-equity ratio is 0.00 versus a D/E of 0.00 for EXPR. MDXG is therefore the more solvent of the two companies, and has lower financial risk.Valuation
MDXG trades at a forward P/E of 16.00, a P/B of 5.51, and a P/S of 2.85, compared to a forward P/E of 16.81, a P/B of 1.09, and a P/S of 0.32 for EXPR. MDXG is the cheaper of the two stocks on an earnings basis but is expensive in terms of P/B and P/S 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”. MDXG is currently priced at a -52.19% to its one-year price target of 15.33. Comparatively, EXPR is -7.98% relative to its price target of 9.90. This suggests that MDXG is the better investment over the next year.
Risk and Volatility
Analyst use beta to measure a stock’s volatility relative to the overall market. Stocks with a beta above 1 tend to have bigger swings in price than the market as a whole, the opposite being the case for stocks with a beta below 1. MDXG has a beta of 1.46 and EXPR’s beta is 0.87. EXPR’s shares are therefore the less volatile of the two stocks.Insider Activity and Investor Sentiment
The analysis of insider buying and selling trends can be extended to the aggregate level. Short interest, which represents the percentage of a stock’s tradable shares currently being shorted, captures what the market as a whole feels about a stock. MDXG has a short ratio of 13.47 compared to a short interest of 6.04 for EXPR. This implies that the market is currently less bearish on the outlook for EXPR.Summary
Express, Inc. (NYSE:EXPR) beats MiMedx Group, Inc. (NASDAQ:MDXG) on a total of 7 of the 14 factors compared between the two stocks. EXPR is growing fastly, has a higher cash conversion rate and has lower financial risk. In terms of valuation, EXPR is the cheaper of the two stocks on book value and sales basis, Finally, EXPR has better sentiment signals based on short interest.