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Rigel Pharmaceuticals, Inc. (RIGL) vs. Coeur Mining, Inc. (CDE): Which is the Better Investment?

Rigel Pharmaceuticals, Inc. (NASDAQ:RIGL) shares are down more than -17.53% this year and recently decreased -2.44% or -$0.08 to settle at $3.20. Coeur Mining, Inc. (NYSE:CDE), on the other hand, is down -28.13% year to date as of 09/11/2018. It currently trades at $5.39 and has returned -1.28% during the past week.

Rigel Pharmaceuticals, Inc. (NASDAQ:RIGL) and Coeur Mining, Inc. (NYSE:CDE) 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.

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 25.59% for Coeur Mining, Inc. (CDE). RIGL’s ROI is -79.10% while CDE has a ROI of 1.90%. The interpretation is that CDE’s business generates a higher return on investment than RIGL’s.

Cash Flow

The value of a stock is simply the present value of its future free cash flows. RIGL’s free cash flow (“FCF”) per share for the trailing twelve months was -0.17. Comparatively, CDE’s free cash flow per share was -0.23. On a percent-of-sales basis, RIGL’s free cash flow was -0.63% while CDE converted -0.01% of its revenues into cash flow. This means that, for a given level of sales, CDE 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. RIGL has a current ratio of 8.00 compared to 2.20 for CDE. This means that RIGL can more easily cover its most immediate liabilities over the next twelve months. RIGL’s debt-to-equity ratio is 0.00 versus a D/E of 0.51 for CDE. CDE is therefore the more solvent of the two companies, and has lower financial risk.

Valuation

RIGL trades at a P/B of 4.21, and a P/S of 197.26, compared to a forward P/E of 23.64, a P/B of 1.22, and a P/S of 1.45 for CDE. RIGL is the cheaper of the two stocks on an earnings basis but is expensive in terms of P/B and P/S 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

Just because a stock is cheaper doesn’t mean there’s more value to be had. In order to assess value we need to compare the current price to where it’s likely to trade in the future. RIGL is currently priced at a -60.69% to its one-year price target of 8.14. Comparatively, CDE is -45.06% relative to its price target of 9.81. This suggests that RIGL 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. RIGL has a beta of 1.07 and CDE’s beta is 0.63. CDE’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. RIGL has a short ratio of 7.35 compared to a short interest of 3.43 for CDE. This implies that the market is currently less bearish on the outlook for CDE.

Summary




Coeur Mining, Inc. (NYSE:CDE) beats Rigel Pharmaceuticals, Inc. (NASDAQ:RIGL) on a total of 7 of the 14 factors compared between the two stocks. CDE has higher cash flow per share, generates a higher return on investment and has a higher cash conversion rate. In terms of valuation, CDE is the cheaper of the two stocks on book value and sales basis, Finally, CDE has better sentiment signals based on short interest.

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