ZIOPHARM Oncology, Inc. (NASDAQ:ZIOP) shares are up more than 173.26% this year and recently decreased -1.92% or -$0.1 to settle at $5.11. Costamare Inc. (NYSE:CMRE), on the other hand, is up 89.75% year to date as of 12/02/2019. It currently trades at $8.33 and has returned 3.87% during the past week.
ZIOPHARM Oncology, Inc. (NASDAQ:ZIOP) and Costamare Inc. (NYSE:CMRE) are the two most active stocks in the Biotechnology industry based on today’s trading volumes. Investor interest in the two stocks is clearly very high, but which is the better investment? To answer this question, we will compare the two companies across growth, profitability, risk, and valuation metrics, and also examine their analyst ratings and insider activity trends.
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 4.13% for Costamare Inc. (CMRE). ZIOP’s ROI is -63.00% while CMRE has a ROI of 3.90%. The interpretation is that CMRE’s business generates a higher return on investment than ZIOP’s.
The amount of free cash flow available to investors is ultimately what determines the value of a stock. ZIOP’s free cash flow (“FCF”) per share for the trailing twelve months was -0.06. Comparatively, CMRE’s free cash flow per share was +0.39. On a percent-of-sales basis, ZIOP’s free cash flow was -7.23% while CMRE converted 0.01% of its revenues into cash flow. This means that, for a given level of sales, CMRE is able to generate more free cash flow for investors.Liquidity and Financial Risk
Liquidity and leverage ratios measure a company’s ability to meet short-term obligations and longer-term debts. ZIOP has a current ratio of 10.30 compared to 0.80 for CMRE. This means that ZIOP can more easily cover its most immediate liabilities over the next twelve months. ZIOP’s debt-to-equity ratio is 0.00 versus a D/E of 1.14 for CMRE. CMRE is therefore the more solvent of the two companies, and has lower financial risk.
ZIOP trades at a P/B of 8.24, compared to a forward P/E of 7.15, a P/B of 0.70, and a P/S of 2.01 for CMRE. 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. ZIOP is currently priced at a -18.89% to its one-year price target of 6.30. Comparatively, CMRE is 7.48% relative to its price target of 7.75. This suggests that ZIOP 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. ZIOP has a beta of 2.59 and CMRE’s beta is 2.24. CMRE’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. ZIOP has a short ratio of 35.63 compared to a short interest of 2.12 for CMRE. This implies that the market is currently less bearish on the outlook for CMRE.
Costamare Inc. (NYSE:CMRE) beats ZIOPHARM Oncology, Inc. (NASDAQ:ZIOP) on a total of 7 of the 14 factors compared between the two stocks. CMRE higher liquidity, generates a higher return on investment, has higher cash flow per share and has a higher cash conversion rate. Finally, CMRE has better sentiment signals based on short interest.