Financial Contrast: Akorn (AKRX) vs. Dr. Reddy’s Laboratories (RDY)
Akorn (NASDAQ: AKRX) and Dr. Reddy’s Laboratories (NYSE:RDY) are both mid-cap medical companies, but which is the better stock? We will contrast the two businesses based on the strength of their valuation, profitability, dividends, analyst recommendations, institutional ownership, earnings and risk.
This table compares Akorn and Dr. Reddy’s Laboratories’ net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Dr. Reddy’s Laboratories||7.92%||9.27%||5.06%|
Dr. Reddy’s Laboratories pays an annual dividend of $0.29 per share and has a dividend yield of 0.8%. Akorn does not pay a dividend. Dr. Reddy’s Laboratories pays out 27.9% of its earnings in the form of a dividend.
This is a breakdown of recent ratings and target prices for Akorn and Dr. Reddy’s Laboratories, as provided by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Dr. Reddy’s Laboratories||1||1||2||0||2.25|
Akorn currently has a consensus target price of $29.13, indicating a potential downside of 10.88%. Dr. Reddy’s Laboratories has a consensus target price of $31.62, indicating a potential downside of 11.10%. Given Akorn’s higher probable upside, analysts clearly believe Akorn is more favorable than Dr. Reddy’s Laboratories.
Valuation & Earnings
This table compares Akorn and Dr. Reddy’s Laboratories’ revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|Akorn||$1.02 billion||4.00||$372.04 million||$1.48||22.08|
|Dr. Reddy’s Laboratories||$2.20 billion||2.68||$385.37 million||$1.04||34.20|
Dr. Reddy’s Laboratories has higher revenue and earnings than Akorn. Akorn is trading at a lower price-to-earnings ratio than Dr. Reddy’s Laboratories, indicating that it is currently the more affordable of the two stocks.
Volatility & Risk
Akorn has a beta of 1.4, indicating that its share price is 40% more volatile than the S&P 500. Comparatively, Dr. Reddy’s Laboratories has a beta of 0.36, indicating that its share price is 64% less volatile than the S&P 500.
Insider & Institutional Ownership
70.0% of Akorn shares are owned by institutional investors. Comparatively, 15.3% of Dr. Reddy’s Laboratories shares are owned by institutional investors. 28.2% of Akorn shares are owned by company insiders. Comparatively, 2.0% of Dr. Reddy’s Laboratories shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.
Akorn beats Dr. Reddy’s Laboratories on 10 of the 16 factors compared between the two stocks.
Akorn Inc. (Akorn), together with its subsidiaries, is a specialty generic pharmaceutical company that develops, manufactures and markets generic and branded prescription pharmaceuticals, as well as private-label over-the-counter (OTC) consumer health products and animal health pharmaceuticals. The Company operates through two segments: Prescription Pharmaceuticals and the Consumer Health. The Prescription Pharmaceuticals segment consists of generic and branded prescription pharmaceuticals in a range of dosage forms, including sterile ophthalmics, injectables and inhalants and non-sterile oral liquids, topicals and nasal sprays and otics. The Consumer Health segment consists of branded and private-label OTC products and animal health products dispensed by veterinary professionals. Its branded and private-label OTC products are focused on ophthalmics, including a dry eye treatment TheraTears Therapy for Your Eyes.
About Dr. Reddy’s Laboratories
Dr. Reddy’s Laboratories Limited is a pharmaceutical company that is engaged in providing medicines. The Company operates in three segments: Global Generics, Pharmaceutical Services and Active Ingredients (PSAI), and Proprietary Products. The Global Generics segment includes manufacturing and marketing prescription and over-the-counter finished pharmaceutical products ready for consumption by the patient, marketed under a brand name (branded formulations) or as generic finished dosages with therapeutic equivalence to branded formulations (generics). PSAI segment includes the Company’s business of manufacturing and marketing active pharmaceutical ingredients and intermediates (API) or bulk drugs. Proprietary Products segment focuses on the research, development and manufacture of differentiated formulations and new chemical entities. These products fall within the dermatology and neurology therapeutic areas, and are marketed and sold through its subsidiary, Promius Pharma, LLC.
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