CRISPR Therapeutics AG (NASDAQ:CRSP) shares are up more than 140.67% this year and recently increased 4.71% or $3.09 to settle at $68.76. Tupperware Brands Corporation (NYSE:TUP), on the other hand, is down -73.52% year to date as of 11/26/2019. It currently trades at $8.36 and has returned 0.36% during the past week.
CRISPR Therapeutics AG (NASDAQ:CRSP) and Tupperware Brands Corporation (NYSE:TUP) 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.
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, TUP is expected to grow at a 12.00% annual rate. All else equal, TUP’s higher growth rate would imply a greater potential for capital appreciation.
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. EBITDA margin of 19.15% for Tupperware Brands Corporation (TUP). CRSP’s ROI is -40.70% while TUP has a ROI of 38.30%. The interpretation is that TUP’s business generates a higher return on investment than CRSP’s.
Earnings don’t always accurately reflect the amount of cash that a company brings in. CRSP’s free cash flow (“FCF”) per share for the trailing twelve months was +2.27. Comparatively, TUP’s free cash flow per share was -0.24. On a percent-of-sales basis, CRSP’s free cash flow was 4.02% while TUP converted -0.57% of its revenues into cash flow. This means that, for a given level of sales, CRSP is able to generate more free cash flow for investors.
Liquidity and Financial Risk
Balance sheet risk is one of the biggest factors to consider before investing. CRSP has a current ratio of 8.30 compared to 0.80 for TUP. This means that CRSP can more easily cover its most immediate liabilities over the next twelve months.
CRSP trades at a P/B of 6.37, and a P/S of 20.26, compared to a forward P/E of 3.18, and a P/S of 0.22 for TUP. CRSP 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
When investing it’s crucial to distinguish between price and value. As Warren Buffet said, “price is what you pay, value is what you get”. CRSP is currently priced at a 10.16% to its one-year price target of 62.42. Comparatively, TUP is -26.54% relative to its price target of 11.38. This suggests that TUP is the better investment over the next year.
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. CRSP has a short ratio of 6.82 compared to a short interest of 3.69 for TUP. This implies that the market is currently less bearish on the outlook for TUP.
Tupperware Brands Corporation (NYSE:TUP) beats CRISPR Therapeutics AG (NASDAQ:CRSP) on a total of 8 of the 14 factors compared between the two stocks. TUP has higher cash flow per share, is more profitable, generates a higher return on investment and has lower financial risk. In terms of valuation, TUP is the cheaper of the two stocks on book value and sales basis, TUP is more undervalued relative to its price target. Finally, TUP has better sentiment signals based on short interest.