Earnings

Which of these 2 stocks can turn out to be absolute gem? – Viking Therapeutics, Inc. (VKTX), ImmunoGen, Inc. (IMGN)

The shares of Viking Therapeutics, Inc. have increased by more than 186.70% this year alone. The shares recently went up by 2.11% or $0.24 and now trades at $11.64. The shares of ImmunoGen, Inc. (NASDAQ:IMGN), has slumped by -6.71% year to date as of 11/16/2018. The shares currently trade at $5.98 and have been able to report a change of 0.84% over the past one week.

The stock of Viking Therapeutics, Inc. and ImmunoGen, Inc. were two of the most active stocks on Friday. Investors seem to be very interested in what happens to the stocks of these two companies but do investors favor one over the other? We will analyze the growth, profitability, risk, valuation, and insider trends of both companies and see which one investors prefer.

Profitability and Returns

Growth alone cannot be used to see if the company will be valuable. Shareholders will be the losers if a company invest in ventures that aren’t profitable enough to support upbeat growth. In order for us to accurately measure profitability and return, we will be using the EBITDA margin and Return on Investment (ROI), which balances the difference in capital structure. These figures suggest that IMGN ventures generate a higher ROI than that of VKTX.

Liquidity and Financial Risk

The ability of a company to meet up with its short-term obligations and be able to clear its longer-term debts is measured using Liquidity and leverage ratios. The current ratio for VKTX is 64.60 and that of IMGN is 4.60. This implies that it is easier for VKTX to cover its immediate obligations over the next 12 months than IMGN. The debt ratio of VKTX is 0.00 compared to 0.04 for IMGN. IMGN can be able to settle its long-term debts and thus is a lower financial risk than VKTX.

Valuation



VKTX currently trades at a P/B of 2.36, while IMGN trades at a P/B of 18.69, and a P/S of 11.22. This means that looking at the earnings, book values and sales basis, VKTX is the cheaper one. It is very obvious that earnings are the most important factors to investors, thus analysts are most likely to place their bet on the P/E.

Analyst Price Targets and Opinions

The mistake some people make is that they think a cheap stock has more value to it. In order to know the value of a stock, there is need to compare its current price to its likely trading price in the future. The price of VKTX is currently at a -63.72% to its one-year price target of 32.08. Looking at its rival pricing, IMGN is at a -60.13% relative to its price target of 15.00.

When looking at the investment recommendation on say a scale of 1 to 5 (1 being a strong buy, 3 a hold, and 5 a sell), VKTX is given a 1.90 while 1.90 placed for IMGN. This means that analysts are equally bullish on their outlook for the two stocks stocks.

Insider Activity and Investor Sentiment




Short interest or otherwise called the percentage of a stock’s tradable shares currently being shorted is another data that investors use to get a handle on sentiment. The short ratio for VKTX is 4.87 while that of IMGN is just 6.83. This means that analysts are more bullish on the forecast for VKTX stock.

Conclusion

The stock of ImmunoGen, Inc. defeats that of Viking Therapeutics, Inc. when the two are compared, with IMGN taking 2 out of the total factors that were been considered. IMGN happens to be more profitable, generates a higher ROI, has higher cash flow per share, higher liquidity and has a lower financial risk. When looking at the stock valuation, IMGN is the cheaper one on an earnings, book value and sales basis. Finally, the sentiment signal for IMGN is better on when it is viewed on short interest.

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