Ironwood Pharmaceuticals, Inc. (IRWD) is better stock pick than CoreCivic, Inc. (CXW)

The shares of Ironwood Pharmaceuticals, Inc. have increased by more than 0.73% this year alone. The shares recently went up by 9.03% or $1.25 and now trades at $15.10. The shares of CoreCivic, Inc. (NYSE:CXW), has jumped by 0.49% year to date as of 01/11/2018. The shares currently trade at $22.61 and have been able to report a change of 0.09% over the past one week.

The stock of Ironwood Pharmaceuticals, Inc. and CoreCivic, Inc. were two of the most active stocks on Thursday. 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. These figures suggest that CXW ventures generate a higher ROI than that of IRWD.

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, IRWD’s free cash flow per share is a negative -0.01, while that of CXW is positive 0.96.

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 IRWD is 4.90 and that of CXW is 1.10. This implies that it is easier for IRWD to cover its immediate obligations over the next 12 months than CXW.


IRWD currently trades at a P/S of 7.79 while CXW trades at a forward P/E of 16.66, a P/B of 1.83, and a P/S of 1.49. This means that looking at the earnings, book values and sales basis, CXW 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 IRWD is currently at a -9.85% to its one-year price target of 16.75. Looking at its rival pricing, CXW is at a -30.06% relative to its price target of 32.33. This figure implies that over the next one year, CXW is a better investment.

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), IRWD is given a 2.40 while 2.30 placed for CXW. This means that analysts are more bullish on the outlook for IRWD 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 IRWD is 14.09 while that of CXW is just 3.27. This means that analysts are more bullish on the forecast for CXW stock.


The stock of Ironwood Pharmaceuticals, Inc. defeats that of CoreCivic, Inc. when the two are compared, with IRWD taking 4 out of the total factors that were been considered. IRWD 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, IRWD is the cheaper one on an earnings, book value and sales basis. Finally, the sentiment signal for IRWD is better on when it is viewed on short interest.

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