Quad/Graphics, Inc. (NYSE:QUAD) shares are down more than -24.87% this year and recently increased 10.05% or $1.55 to settle at $16.98. Oragenics, Inc. (NYSE:OGEN), on the other hand, is down -55.73% year to date as of 11/01/2018. It currently trades at $1.04 and has returned 11.83% during the past week.
Quad/Graphics, Inc. (NYSE:QUAD) and Oragenics, Inc. (NYSE:OGEN) are the two most active stocks in the Business Services industry based on today’s trading volumes. We will compare the two companies based on the strength of various metrics, including growth, profitability, risk, return, and valuation to determine if one is a better investment than the other.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. Analysts expect QUAD to grow earnings at a 5.00% annual rate over the next 5 years.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. Quad/Graphics, Inc. (QUAD) has an EBITDA margin of 6.73%. This suggests that QUAD underlying business is more profitableCash Flow
If there’s one thing investors care more about than earnings, it’s cash flow. QUAD’s free cash flow (“FCF”) per share for the trailing twelve months was -0.12. Comparatively, OGEN’s free cash flow per share was -0.38.Liquidity and Financial Risk
Liquidity and leverage ratios are important because they reveal the financial health of a company. QUAD has a current ratio of 1.20 compared to 3.30 for OGEN. This means that OGEN can more easily cover its most immediate liabilities over the next twelve months.Valuation
QUAD trades at a forward P/E of 8.07, a P/B of 1.78, and a P/S of 0.21, compared to for OGEN. QUAD 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 isn’t a good investment if the stock is priced accurately. To get a sense of “value” we must compare the current price to some measure of intrinsic value such as a price target. QUAD is currently priced at a -45.23% to its one-year price target of 31.00. Comparatively, OGEN is -48% relative to its price target of 2.00. This suggests that OGEN 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. QUAD has a beta of 1.22 and OGEN’s beta is 1.06. OGEN’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. QUAD has a short ratio of 3.60 compared to a short interest of 0.27 for OGEN. This implies that the market is currently less bearish on the outlook for OGEN.Summary
Oragenics, Inc. (NYSE:OGEN) beats Quad/Graphics, Inc. (NYSE:QUAD) on a total of 8 of the 13 factors compared between the two stocks. OGEN is growing fastly and has lower financial risk. In terms of valuation, OGEN is the cheaper of the two stocks on an earnings, book value and sales basis, OGEN is more undervalued relative to its price target. Finally, OGEN has better sentiment signals based on short interest.