Earnings

Choosing Between Hot Stocks: Jounce Therapeutics, Inc. (JNCE), Digital Turbine, Inc. (APPS)

The shares of Jounce Therapeutics, Inc. have decreased by more than -37.73% this year alone. The shares recently went up by 9.22% or $0.67 and now trades at $7.94. The shares of Digital Turbine, Inc. (NASDAQ:APPS), has jumped by 5.03% year to date as of 06/12/2018. The shares currently trade at $1.88 and have been able to report a change of 9.94% over the past one week.

The stock of Jounce Therapeutics, Inc. and Digital Turbine, Inc. were two of the most active stocks on Tuesday. Investors seem to be very interested in what happens to the stocks of these two companies but do investors favor one over the other? We will analyze the growth, profitability, risk, valuation, and insider trends of both companies and see which one investors prefer.

Profitability and Returns

Growth alone cannot be used to see if the company will be valuable. Shareholders will be the losers if a company invest in ventures that aren’t profitable enough to support upbeat growth. In order for us to accurately measure profitability and return, we will be using the EBITDA margin and Return on Investment (ROI), which balances the difference in capital structure. The ROI of JNCE is -11.50% while that of APPS is -31.00%. These figures suggest that JNCE ventures generate a higher ROI than that of APPS.

Cash Flow

The value of a stock is ultimately determined by the amount of cash flow that the investors have available. Over the last 12 months, JNCE’s free cash flow per share is a negative -0.03.

Liquidity and Financial Risk



The ability of a company to meet up with its short-term obligations and be able to clear its longer-term debts is measured using Liquidity and leverage ratios. The current ratio for JNCE is 3.60 and that of APPS is 0.80. This implies that it is easier for JNCE to cover its immediate obligations over the next 12 months than APPS. The debt ratio of JNCE is 0.00 compared to 0.13 for APPS. APPS can be able to settle its long-term debts and thus is a lower financial risk than JNCE.

Valuation

JNCE currently trades at a P/B of 2.33, and a P/S of 4.04 while APPS trades at a P/B of 2.27, and a P/S of 1.21. This means that looking at the earnings, book values and sales basis, JNCE is the cheaper one. It is very obvious that earnings are the most important factors to investors, thus analysts are most likely to place their bet on the P/E.

Analyst Price Targets and Opinions

The mistake some people make is that they think a cheap stock has more value to it. In order to know the value of a stock, there is need to compare its current price to its likely trading price in the future. The price of JNCE is currently at a -51.38% to its one-year price target of 16.33. Looking at its rival pricing, APPS is at a -40.32% relative to its price target of 3.15.




When looking at the investment recommendation on say a scale of 1 to 5 (1 being a strong buy, 3 a hold, and 5 a sell), JNCE is given a 2.40 while 1.60 placed for APPS. This means that analysts are more bullish on the outlook for JNCE stocks.

Insider Activity and Investor Sentiment

Short interest or otherwise called the percentage of a stock’s tradable shares currently being shorted is another data that investors use to get a handle on sentiment. The short ratio for JNCE is 5.92 while that of APPS is just 7.10. This means that analysts are more bullish on the forecast for JNCE stock.

Conclusion

The stock of Jounce Therapeutics, Inc. defeats that of Digital Turbine, Inc. when the two are compared, with JNCE taking 6 out of the total factors that were been considered. JNCE happens to be more profitable, generates a higher ROI, has higher cash flow per share, higher liquidity and has a lower financial risk. When looking at the stock valuation, JNCE is the cheaper one on an earnings, book value and sales basis. Finally, the sentiment signal for JNCE is better on when it is viewed on short interest.

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