Sangamo Therapeutics, Inc. (NASDAQ:SGMO) shares are down more than -10.37% this year and recently increased 0.34% or $0.05 to settle at $14.70. Express, Inc. (NYSE:EXPR), on the other hand, is up 3.94% year to date as of 09/11/2018. It currently trades at $10.55 and has returned -8.10% during the past week.
Sangamo Therapeutics, Inc. (NASDAQ:SGMO) and Express, Inc. (NYSE:EXPR) 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.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, EXPR is expected to grow at a 12.00% annual rate. All else equal, EXPR’s higher growth rate would imply a greater potential for capital appreciation.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 6.1% for Express, Inc. (EXPR). SGMO’s ROI is -26.50% while EXPR has a ROI of 2.80%. The interpretation is that EXPR’s business generates a higher return on investment than SGMO’s.Cash Flow
Earnings don’t always accurately reflect the amount of cash that a company brings in. SGMO’s free cash flow (“FCF”) per share for the trailing twelve months was +1.23. Comparatively, EXPR’s free cash flow per share was +0.31. On a percent-of-sales basis, SGMO’s free cash flow was 0.34% while EXPR converted 1.08% of its revenues into cash flow. This means that, for a given level of sales, EXPR 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. SGMO has a current ratio of 7.20 compared to 2.00 for EXPR. This means that SGMO can more easily cover its most immediate liabilities over the next twelve months. SGMO’s debt-to-equity ratio is 0.07 versus a D/E of 0.00 for EXPR. SGMO is therefore the more solvent of the two companies, and has lower financial risk.Valuation
SGMO trades at a P/B of 3.68, and a P/S of 24.08, compared to a forward P/E of 19.65, a P/B of 1.25, and a P/S of 0.38 for EXPR. SGMO 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
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. SGMO is currently priced at a -46.87% to its one-year price target of 27.67. Comparatively, EXPR is 17.22% relative to its price target of 9.00. This suggests that SGMO 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. SGMO has a beta of 3.04 and EXPR’s beta is 0.84. EXPR’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. SGMO has a short ratio of 4.71 compared to a short interest of 6.65 for EXPR. This implies that the market is currently less bearish on the outlook for SGMO.Summary
Express, Inc. (NYSE:EXPR) beats Sangamo Therapeutics, Inc. (NASDAQ:SGMO) on a total of 8 of the 14 factors compared between the two stocks. EXPR has higher cash flow per share, is more profitable, generates a higher return on investment, has a higher cash conversion rate and has lower financial risk. In terms of valuation, EXPR is the cheaper of the two stocks on book value and sales basis, Finally, RHE has better sentiment signals based on short interest.