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A Side-by-side Analysis of ImmunoGen, Inc. (IMGN) and Citizens Financial Group, Inc. (CFG)

ImmunoGen, Inc. (NASDAQ:IMGN) shares are up more than 67.86% this year and recently decreased -0.09% or -$0.01 to settle at $10.76. Citizens Financial Group, Inc. (NYSE:CFG), on the other hand, is up 1.24% year to date as of 05/17/2018. It currently trades at $42.50 and has returned 0.33% during the past week.

ImmunoGen, Inc. (NASDAQ:IMGN) and Citizens Financial Group, Inc. (NYSE:CFG) are the two most active stocks in the Biotechnology 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

One of the key things investors look for in a company is the ability to grow earnings at a high compound rate over time. Comparatively, CFG is expected to grow at a 21.73% annual rate. All else equal, CFG’s higher growth rate would imply a greater potential for capital appreciation.

Profitability and Returns

A high growth rate isn’t necessarily valuable to investors. In fact, companies that overinvest in low return projects just to achieve a high growth rate can actually destroy shareholder value. Profitability and returns are a measure of the quality of a company’s business and its growth opportunities. We’ll use EBITDA margin and Return on Investment (ROI) to measure this. EBITDA margin of 60.32% for Citizens Financial Group, Inc. (CFG). IMGN’s ROI is 371.00% while CFG has a ROI of 10.30%. The interpretation is that IMGN’s business generates a higher return on investment than CFG’s.

Cash Flow



If there’s one thing investors care more about than earnings, it’s cash flow. IMGN’s free cash flow (“FCF”) per share for the trailing twelve months was -0.39. Comparatively, CFG’s free cash flow per share was +0.99. On a percent-of-sales basis, IMGN’s free cash flow was -0.04% while CFG converted 7.44% of its revenues into cash flow. This means that, for a given level of sales, CFG is able to generate more free cash flow for investors.

Valuation

IMGN trades at a P/S of 12.75, compared to a forward P/E of 11.19, a P/B of 1.05, and a P/S of 4.07 for CFG. 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. IMGN is currently priced at a -18.11% to its one-year price target of 13.14. Comparatively, CFG is -13.46% relative to its price target of 49.11. This suggests that IMGN is the better investment over the next year.

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. IMGN has a beta of 2.09 and CFG’s beta is 1.37. CFG’s shares are therefore the less volatile of the two stocks.

Insider Activity and Investor Sentiment

Short interest is another tool that analysts use to gauge investor sentiment. It represents the percentage of a stock’s tradable shares that are being shorted. IMGN has a short ratio of 4.76 compared to a short interest of 1.67 for CFG. This implies that the market is currently less bearish on the outlook for CFG.

Summary




Citizens Financial Group, Inc. (NYSE:CFG) beats ImmunoGen, Inc. (NASDAQ:IMGN) on a total of 7 of the 14 factors compared between the two stocks. CFG generates a higher return on investment, is more profitable, has higher cash flow per share and has a higher cash conversion rate. Finally, CFG has better sentiment signals based on short interest.

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