EyeGate Pharmaceuticals, Inc. (NASDAQ:EYEG) shares are down more than -64.77% this year and recently decreased -4.92% or -$0.02 to settle at $0.38. DPW Holdings, Inc. (NYSE:DPW), on the other hand, is down -86.19% year to date as of 09/11/2018. It currently trades at $0.44 and has returned -20.70% during the past week.
EyeGate Pharmaceuticals, Inc. (NASDAQ:EYEG) and DPW Holdings, Inc. (NYSE:DPW) 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
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 Return on Investment (ROI), which adjust for differences in capital structure, as measure of profitability and return. EYEG’s ROI is 695.60% while DPW has a ROI of -26.00%. The interpretation is that EYEG’s business generates a higher return on investment than DPW’s.Cash Flow
Cash is king when it comes to investing. EYEG’s free cash flow (“FCF”) per share for the trailing twelve months was -0.05. Comparatively, DPW’s free cash flow per share was -0.07. On a percent-of-sales basis, EYEG’s free cash flow was -0.53% while DPW converted -0.05% of its revenues into cash flow. This means that, for a given level of sales, DPW 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. EYEG has a current ratio of 3.20 compared to 0.80 for DPW. This means that EYEG can more easily cover its most immediate liabilities over the next twelve months. EYEG’s debt-to-equity ratio is 0.00 versus a D/E of 0.30 for DPW. DPW is therefore the more solvent of the two companies, and has lower financial risk.Valuation
EYEG trades at a forward P/E of 18.85, a P/B of 1.05, and a P/S of 12.94, compared to a P/B of 0.78, and a P/S of 1.55 for DPW. EYEG is the expensive of the two stocks on an earnings, book value and sales basis. 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. EYEG is currently priced at a -87.33% to its one-year price target of 3.00. Comparatively, DPW is -98.3% relative to its price target of 25.81. This suggests that DPW 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. EYEG has a beta of 3.48 and DPW’s beta is 1.96. DPW’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. EYEG has a short ratio of 2.29 compared to a short interest of 4.89 for DPW. This implies that the market is currently less bearish on the outlook for EYEG.Summary
DPW Holdings, Inc. (NYSE:DPW) beats EyeGate Pharmaceuticals, Inc. (NASDAQ:EYEG) on a total of 6 of the 14 factors compared between the two stocks. DPW generates a higher return on investment. In terms of valuation, DPW is the cheaper of the two stocks on an earnings, book value and sales basis, DPW is more undervalued relative to its price target. Finally, PLG has better sentiment signals based on short interest.