Check-Cap (NASDAQ: CHEK) and Eagle Pharmaceuticals (NASDAQ:EGRX) are both small-cap medical companies, but which is the superior investment? We will contrast the two companies based on the strength of their valuation, dividends, profitability, risk, earnings, analyst recommendations and institutional ownership.

Institutional and Insider Ownership

19.3% of Check-Cap shares are held by institutional investors. 19.5% of Eagle Pharmaceuticals shares are held by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Analyst Recommendations

This is a breakdown of current recommendations and price targets for Check-Cap and Eagle Pharmaceuticals, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Check-Cap 0 0 3 0 3.00
Eagle Pharmaceuticals 1 0 3 0 2.50

Check-Cap currently has a consensus target price of $6.00, indicating a potential upside of 244.83%. Eagle Pharmaceuticals has a consensus target price of $73.25, indicating a potential upside of 29.76%. Given Check-Cap’s stronger consensus rating and higher probable upside, analysts clearly believe Check-Cap is more favorable than Eagle Pharmaceuticals.

Profitability

This table compares Check-Cap and Eagle Pharmaceuticals’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Check-Cap N/A -98.88% -80.97%
Eagle Pharmaceuticals 39.32% 66.30% 48.44%

Valuation and Earnings

This table compares Check-Cap and Eagle Pharmaceuticals’ top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Check-Cap N/A N/A -$9.62 million ($0.59) -2.95
Eagle Pharmaceuticals $245.88 million 3.48 $83.99 million $5.95 9.49

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

Risk & Volatility

Check-Cap has a beta of -0.37, suggesting that its stock price is 137% less volatile than the S&P 500. Comparatively, Eagle Pharmaceuticals has a beta of 1.31, suggesting that its stock price is 31% more volatile than the S&P 500.

Summary

Eagle Pharmaceuticals beats Check-Cap on 8 of the 11 factors compared between the two stocks.

Check-Cap Company Profile

Check-Cap Ltd. (Check-Cap) is a clinical-stage medical diagnostics company. The Company is engaged in the development of an ingestible imaging capsule that utilizes low-dose X-rays for the detection and imaging of colonic polyps and colorectal cancers, or CRC. The Company’s system consists of main components, such as ingestible scanning capsule; Capsule Positioning System (CPS), a recorder worn on the patient’s back, and a personal computer (PC)-based work station for data reconstruction and image processing. The Company’s scanning capsule will be swallowed and propelled by natural motility through the gastrointestinal tract and excreted naturally with no need for retrieval for data collection. Its scanning capsule employs low-dose X-rays, which allow the system to image the interior lining of the colon even when surrounded by intestinal content. Its capsule transmits information to a receiving device worn on the patient’s body that stores the information for off-line analysis.

Eagle Pharmaceuticals Company Profile

Eagle Pharmaceuticals, Inc. is a specialty pharmaceutical company. The Company focuses on developing and commercializing injectable products in the critical care and oncology areas. The Company’s product portfolio includes products, including Argatroban; Ryanodex; docetaxel injection, non-alcohol formulation; and Bendeka. Its advanced candidates include EP-3101 (bendamustine Resistance Temperature Detectors (RTD)) (EP-3101), EP-4104 (dantrolene sodium for exertional heat stroke (EHS)) (EP-4104), EGL-4104-C-1702 (dantrolene sodium for drug induced hyperthermia), EP-5101 (pemetrexed) (EP-5101) and EGL-5385-C-1701 (fulvestrant). Its product portfolio focuses on oncology, critical care and orphan diseases. Bendamustine is an alkylating agent approved for use in chronic lymphocytic leukemia (CLL), and indolent B-cell non-Hodgkin’s lymphoma (NHL), that has progressed during or within six months of treatment with rituximab or a rituximab-containing regimen.

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