Earnings

Critical Comparison: Akers Biosciences, Inc. (AKER) vs. ImmunoGen, Inc. (IMGN)

ImmunoGen, Inc. (NASDAQ:IMGN), on the other hand, is up 85.65% year to date as of 03/13/2018. It currently trades at $11.90 and has returned 5.03% during the past week.

Akers Biosciences, Inc. (NASDAQ:AKER) and ImmunoGen, Inc. (NASDAQ:IMGN) are the two most active stocks in the market 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 Return on Investment (ROI) as measures of profitability and return. AKER’s ROI is -97.90% while IMGN has a ROI of 371.00%. The interpretation is that IMGN’s business generates a higher return on investment than AKER’s.



Cash Flow 

The value of a stock is simply the present value of its future free cash flows. AKER’s free cash flow (“FCF”) per share for the trailing twelve months was -0.12. Comparatively, IMGN’s free cash flow per share was -0.24. On a percent-of-sales basis, AKER’s free cash flow was -0.1% while IMGN converted -0.03% of its revenues into cash flow. This means that, for a given level of sales, IMGN is able to generate more free cash flow for investors.

Liquidity and Financial Risk




Liquidity and leverage ratios are important because they reveal the financial health of a company. AKER has a current ratio of 2.50 compared to 5.00 for IMGN. This means that IMGN can more easily cover its most immediate liabilities over the next twelve months.

Valuation

AKER trades at a forward P/E of 4.93, a P/B of 1.57, and a P/S of 13.98, compared to a P/S of 13.09 for IMGN. AKER is the expensive of the two stocks on an earnings, book value and sales basis. 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 is not necessarily a value stock. Most of the time, a stock is cheap for good reason. A stock only has value if the current price is substantially below the price at which it should trade in the future. AKER is currently priced at a -82.75% to its one-year price target of 4.00. Comparatively, IMGN is 4.11% relative to its price target of 11.43. This suggests that AKER is the better investment over the next year.

The average investment recommendation on a scale of 1 to 5 (1 being a strong buy, 3 a hold, and 5 a sell) is 2.00 for AKER and 2.10 for IMGN, which implies that analysts are more bullish on the outlook for IMGN.

Risk and Volatility

Beta is a metric that investors frequently use to analyze a stock’s systematic risk. A beta above 1 implies above average market volatility. Conversely, a stock with a beta below 1 is seen as less risky than the overall market. AKER has a beta of -0.96 and IMGN’s beta is 2.17. AKER’s shares are therefore the less volatile of the two stocks.

Insider Activity and Investor Sentiment

Short interest, or the percentage of a stock’s tradable shares currently being shorted, is another metric investors use to get a pulse on sentiment.AKER has a short ratio of 0.58 compared to a short interest of 4.26 for IMGN. This implies that the market is currently less bearish on the outlook for AKER.

Summary

ImmunoGen, Inc. (NASDAQ:IMGN) beats Akers Biosciences, Inc. (NASDAQ:AKER) on a total of 7 of the 14 factors compared between the two stocks. IMGN has higher cash flow per share, has a higher cash conversion rate, higher liquidity and has lower financial risk. In terms of valuation, IMGN is the cheaper of the two stocks on an earnings, book value and sales basis, Finally, ATVI has better sentiment signals based on short interest.

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