Finance

Dissecting the Numbers for Funko, Inc. (FNKO) and Advaxis, Inc. (ADXS)

Funko, Inc. (NASDAQ:FNKO) shares are up more than 283.76% this year and recently decreased -17.81% or -$5.53 to settle at $25.52. Advaxis, Inc. (NASDAQ:ADXS), on the other hand, is down -70.06% year to date as of 09/11/2018. It currently trades at $0.85 and has returned -42.94% during the past week.

Funko, Inc. (NASDAQ:FNKO) and Advaxis, Inc. (NASDAQ:ADXS) are the two most active stocks in the Toys & Games 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

Companies that can consistently grow earnings at a high compound rate usually have the greatest potential to create value for shareholders in the long-run. Analysts expect FNKO to grow earnings at a 1.80% annual rate over the next 5 years.

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. Funko, Inc. (FNKO) has an EBITDA margin of 27.43%. This suggests that FNKO underlying business is more profitable FNKO’s ROI is 11.00% while ADXS has a ROI of -173.30%. The interpretation is that FNKO’s business generates a higher return on investment than ADXS’s.

Cash Flow



Earnings don’t always accurately reflect the amount of cash that a company brings in. FNKO’s free cash flow (“FCF”) per share for the trailing twelve months was -0.07. Comparatively, ADXS’s free cash flow per share was -0.37. On a percent-of-sales basis, FNKO’s free cash flow was -0% while ADXS converted -0.16% of its revenues into cash flow. This means that, for a given level of sales, FNKO is able to generate more free cash flow for investors.

Liquidity and Financial Risk

Analysts look at liquidity and leverage ratios to assess how easily a company can cover its liabilities. FNKO has a current ratio of 1.60 compared to 3.50 for ADXS. This means that ADXS can more easily cover its most immediate liabilities over the next twelve months. FNKO’s debt-to-equity ratio is 1.85 versus a D/E of 0.00 for ADXS. FNKO is therefore the more solvent of the two companies, and has lower financial risk.

Valuation

FNKO trades at a forward P/E of 27.89, a P/B of 9.18, and a P/S of 0.98, compared to a P/B of 0.93, and a P/S of 7.29 for ADXS. FNKO is the cheaper of the two stocks on sales basis but is expensive in terms of P/E and P/B ratio. 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. FNKO is currently priced at a 21.12% to its one-year price target of 21.07. Comparatively, ADXS is -66% relative to its price target of 2.50. This suggests that ADXS is the better investment over the next year.

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. FNKO has a short ratio of 1.39 compared to a short interest of 2.74 for ADXS. This implies that the market is currently less bearish on the outlook for FNKO.

Summary




Funko, Inc. (NASDAQ:FNKO) beats Advaxis, Inc. (NASDAQ:ADXS) on a total of 9 of the 14 factors compared between the two stocks. FNKO is growing fastly, is more profitable, generates a higher return on investment, has higher cash flow per share and has a higher cash conversion rate. Finally, FNKO has better sentiment signals based on short interest.

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