Global

Comparing CorMedix, Inc. (CRMD) and Fossil Group, Inc. (FOSL)

CorMedix, Inc. (NYSE:CRMD) shares are up more than 23.41% this year and recently decreased -1.90% or -$0.01 to settle at $0.62. Fossil Group, Inc. (NASDAQ:FOSL), on the other hand, is up 206.56% year to date as of 09/11/2018. It currently trades at $23.82 and has returned 7.30% during the past week.

CorMedix, Inc. (NYSE:CRMD) and Fossil Group, Inc. (NASDAQ:FOSL) are the two most active stocks in the Biotechnology industry based on today’s trading volumes. Investor interest in the two stocks is clearly very high, but which is the better investment? To answer this question, we will compare the two companies across growth, profitability, risk, and valuation metrics, and also examine their analyst ratings and insider activity trends.

Growth

The ability to grow earnings at a compound rate over time is a crucial determinant of investment value. Comparatively, FOSL is expected to grow at a 17.30% annual rate. All else equal, FOSL’s higher growth rate would imply a greater potential for capital appreciation.

Profitability and Returns

Growth in and of itself is not necessarily valuable, and it can even be harmful to shareholders if companies overinvest in unprofitable projects in pursuit of that growth. We will use EBITDA margin and Return on Investment (ROI), which adjust for differences in capital structure, as measure of profitability and return. EBITDA margin of 3.52% for Fossil Group, Inc. (FOSL).

Cash Flow



If there’s one thing investors care more about than earnings, it’s cash flow. CRMD’s free cash flow (“FCF”) per share for the trailing twelve months was -0.05. Comparatively, FOSL’s free cash flow per share was +1.61. On a percent-of-sales basis, CRMD’s free cash flow was -1.48% while FOSL converted 2.85% of its revenues into cash flow. This means that, for a given level of sales, FOSL is able to generate more free cash flow for investors.

Liquidity and Financial Risk

Liquidity and leverage ratios measure a company’s ability to meet short-term obligations and longer-term debts. CRMD has a current ratio of 0.50 compared to 2.10 for FOSL. This means that FOSL can more easily cover its most immediate liabilities over the next twelve months.

Valuation

CRMD trades at a P/S of 294.94, compared to a forward P/E of 38.17, a P/B of 2.28, and a P/S of 0.42 for FOSL. 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. CRMD is currently priced at a -79.33% to its one-year price target of 3.00. Comparatively, FOSL is 15.63% relative to its price target of 20.60. This suggests that CRMD is the better investment over the next year.

Risk and Volatility

Beta is an important measure that gives investors a sense of the market risk associated with a particular stock. A beta above 1 signals above average market risk, while a beta below 1 implies below average volatility. CRMD has a beta of 2.51 and FOSL’s beta is -0.12. FOSL’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. CRMD has a short ratio of 2.29 compared to a short interest of 6.78 for FOSL. This implies that the market is currently less bearish on the outlook for CRMD.

Summary

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

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