GlaxoSmithKline PLC (NYSE: GSK) and Aralez Pharmaceuticals (NASDAQ:ARLZ) are both medical companies, but which is the better stock? We will contrast the two companies based on the strength of their institutional ownership, dividends, analyst recommendations, profitabiliy, valuation, risk and earnings.

Insider & Institutional Ownership

9.0% of GlaxoSmithKline PLC shares are owned by institutional investors. Comparatively, 35.6% of Aralez Pharmaceuticals shares are owned by institutional investors. 10.0% of GlaxoSmithKline PLC shares are owned by insiders. Comparatively, 6.7% of Aralez Pharmaceuticals shares are owned by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.

Dividends

GlaxoSmithKline PLC pays an annual dividend of $1.93 per share and has a dividend yield of 4.6%. Aralez Pharmaceuticals does not pay a dividend. GlaxoSmithKline PLC pays out 232.5% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Volatility & Risk

GlaxoSmithKline PLC has a beta of 1.04, meaning that its share price is 4% more volatile than the S&P 500. Comparatively, Aralez Pharmaceuticals has a beta of 1.37, meaning that its share price is 37% more volatile than the S&P 500.

Earnings and Valuation

This table compares GlaxoSmithKline PLC and Aralez Pharmaceuticals’ top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
GlaxoSmithKline PLC $36.82 billion 2.80 $9.25 billion $0.83 50.92
Aralez Pharmaceuticals $72.18 million 1.23 -$60.55 million ($1.49) -0.91

GlaxoSmithKline PLC has higher revenue and earnings than Aralez Pharmaceuticals. Aralez Pharmaceuticals is trading at a lower price-to-earnings ratio than GlaxoSmithKline PLC, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares GlaxoSmithKline PLC and Aralez Pharmaceuticals’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
GlaxoSmithKline PLC 5.48% 113.31% 9.03%
Aralez Pharmaceuticals -133.92% -66.74% -22.58%

Analyst Ratings

This is a breakdown of current ratings and target prices for GlaxoSmithKline PLC and Aralez Pharmaceuticals, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
GlaxoSmithKline PLC 1 7 10 0 2.50
Aralez Pharmaceuticals 0 0 3 0 3.00

GlaxoSmithKline PLC currently has a consensus target price of $45.67, suggesting a potential upside of 8.06%. Aralez Pharmaceuticals has a consensus target price of $8.75, suggesting a potential upside of 548.15%. Given Aralez Pharmaceuticals’ stronger consensus rating and higher probable upside, analysts plainly believe Aralez Pharmaceuticals is more favorable than GlaxoSmithKline PLC.

Summary

GlaxoSmithKline PLC beats Aralez Pharmaceuticals on 10 of the 15 factors compared between the two stocks.

About GlaxoSmithKline PLC

GlaxoSmithKline plc is a global healthcare company. The Company operates through three segments: Pharmaceuticals, Vaccines and Consumer Healthcare. The Company focuses on its research across six areas: Respiratory diseases, human immunodeficiency virus (HIV)/infectious diseases, Vaccines, Immuno-inflammation, Oncology and Rare diseases. The Company makes a range of prescription medicines, vaccines and consumer healthcare products. The Pharmaceuticals business discovers, develops and commercializes medicines to treat a range of acute and chronic diseases. The Vaccines business provides vaccines for people of all ages from babies and adolescents to adults and older people. The Consumer Healthcare business develops and markets products in Wellness, Oral health, Nutrition and Skin health categories. Its product portfolio includes Adartrel, Bexsero, Daraprim and Quinvaxem. Its brands include Panadol, abreva, polident and physiogel.

About Aralez Pharmaceuticals

Aralez Pharmaceuticals Inc. is a Canada-based specialty pharmaceutical company. The Company focuses on acquiring, developing and commercializing products in cardiovascular, pain and other areas. The Company’s products include Fibricor, Cambia, Fiorinal, Fiorinal C, Soriatane, Bezalip SR, NeoVisc, Uracyst, Durela, Proferrin, Resultz and Collatamp G. Its development products include YOSPRALA and Bilastine. Fibricor (fenofibric acid) is indicated as a complementary therapy along with diet for the treatment of hypertriglyceridemia, and as a complementary therapy along with diet to reduce elevated low-density lipoprotein cholesterol (LDL-C), total cholesterol (Total-C), triglycerides (TG) and apolipoprotein B (Apo B). Fibricor is also used to increase high-density lipoprotein (HDL) cholesterol (HDL-C) in patients with hypercholesterolemia or mixed dyslipidemia. Cambia (diclofenac potassium for oral solution) is a non-steroidal anti-inflammatory drug (NSAID).

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