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Histogenics Corporation (HSGX) vs. Coeur Mining, Inc. (CDE): Which is the Better Investment?

Histogenics Corporation (NASDAQ:HSGX) shares are down more than -75.51% this year and recently decreased -3.44% or -$0.02 to settle at $0.50. Coeur Mining, Inc. (NYSE:CDE), on the other hand, is down -26.67% year to date as of 10/11/2018. It currently trades at $5.50 and has returned -0.36% during the past week.

Histogenics Corporation (NASDAQ:HSGX) and Coeur Mining, Inc. (NYSE:CDE) 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.

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 25.59% for Coeur Mining, Inc. (CDE).

Cash Flow

The value of a stock is simply the present value of its future free cash flows. HSGX’s free cash flow (“FCF”) per share for the trailing twelve months was -0.23. Comparatively, CDE’s free cash flow per share was -0.23.

Liquidity and Financial Risk



Balance sheet risk is one of the biggest factors to consider before investing. HSGX has a current ratio of 0.80 compared to 2.20 for CDE. This means that CDE can more easily cover its most immediate liabilities over the next twelve months.

Valuation

HSGX trades at compared to a forward P/E of 26.44, a P/B of 1.24, and a P/S of 1.47 for CDE. HSGX is the cheaper 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

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. HSGX is currently priced at a -85.29% to its one-year price target of 3.40. Comparatively, CDE is -42.47% relative to its price target of 9.56. This suggests that HSGX is the better investment over the next year.

Risk and Volatility

No discussion on value is complete without taking into account risk. Analysts use a stock’s beta, which measures the volatility of a stock compared to the overall market, to measure systematic risk. A stock with a beta above 1 is more volatile than the market. Conversely, a beta below 1 implies a below average level of risk. HSGX has a beta of 1.49 and CDE’s beta is 0.64. CDE’s shares are therefore the less volatile of the two stocks.

Insider Activity and Investor Sentiment

Analysts often look at short interest, or the percentage of a company’s float currently being shorted by investors, to aid in their outlook for a particular stock. HSGX has a short ratio of 0.04 compared to a short interest of 4.00 for CDE. This implies that the market is currently less bearish on the outlook for HSGX.

Summary




Histogenics Corporation (NASDAQ:HSGX) beats Coeur Mining, Inc. (NYSE:CDE) on a total of 6 of the 13 factors compared between the two stocks. HSGX has lower financial risk. In terms of valuation, HSGX is the cheaper of the two stocks on an earnings, book value and sales basis, HSGX is more undervalued relative to its price target. Finally, HSGX has better sentiment signals based on short interest.

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