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A Side-by-side Analysis of Celldex Therapeutics, Inc. (CLDX) and Hertz Global Holdings, Inc. (HTZ)

Celldex Therapeutics, Inc. (NASDAQ:CLDX) shares are down more than -85.22% this year and recently decreased -2.37% or -$0.01 to settle at $0.42. Hertz Global Holdings, Inc. (NYSE:HTZ), on the other hand, is down -13.76% year to date as of 09/11/2018. It currently trades at $19.06 and has returned 7.20% during the past week.

Celldex Therapeutics, Inc. (NASDAQ:CLDX) and Hertz Global Holdings, Inc. (NYSE:HTZ) are the two most active stocks in the Biotechnology industry 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 EBITDA margin and Return on Investment (ROI) as measures of profitability and return. EBITDA margin of 39.64% for Hertz Global Holdings, Inc. (HTZ). CLDX’s ROI is -49.20% while HTZ has a ROI of 11.40%. The interpretation is that HTZ’s business generates a higher return on investment than CLDX’s.

Cash Flow

Earnings don’t always accurately reflect the amount of cash that a company brings in. CLDX’s free cash flow (“FCF”) per share for the trailing twelve months was -0.12. Comparatively, HTZ’s free cash flow per share was -42.14. On a percent-of-sales basis, CLDX’s free cash flow was -0.15% while HTZ converted -40.3% of its revenues into cash flow. This means that, for a given level of sales, CLDX is able to generate more free cash flow for investors.

Liquidity and Financial Risk

CLDX’s debt-to-equity ratio is 0.00 versus a D/E of 16.40 for HTZ. HTZ is therefore the more solvent of the two companies, and has lower financial risk.

Valuation

CLDX trades at a P/B of 0.48, and a P/S of 4.79, compared to a forward P/E of 69.06, a P/B of 1.51, and a P/S of 0.17 for HTZ. 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. CLDX is currently priced at a -90.05% to its one-year price target of 4.22. Comparatively, HTZ is -12.69% relative to its price target of 21.83. This suggests that CLDX 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. CLDX has a beta of 2.25 and HTZ’s beta is 1.94. HTZ’s shares are therefore the less volatile of the two stocks.

Insider Activity and Investor Sentiment

Comparing the number of shares sold short to the float is a method analysts often use to get a reading on investor sentiment. CLDX has a short ratio of 1.55 compared to a short interest of 5.35 for HTZ. This implies that the market is currently less bearish on the outlook for CLDX.

Summary

Celldex Therapeutics, Inc. (NASDAQ:CLDX) beats Hertz Global Holdings, Inc. (NYSE:HTZ) on a total of 9 of the 14 factors compared between the two stocks. CLDX has higher cash flow per share, has a higher cash conversion rate, higher liquidity and has lower financial risk. In terms of valuation, CLDX is the cheaper of the two stocks on an earnings and book value, CLDX is more undervalued relative to its price target. Finally, CLDX has better sentiment signals based on short interest.

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