Dr. Reddy’s Laboratories (NYSE: RDY) and Pacira Pharmaceuticals (NASDAQ:PCRX) are both medical companies, but which is the better business? We will compare the two businesses based on the strength of their valuation, institutional ownership, risk, dividends, analyst recommendations, profitability and earnings.

Valuation & Earnings

This table compares Dr. Reddy’s Laboratories and Pacira Pharmaceuticals’ revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Dr. Reddy’s Laboratories $2.17 billion 2.67 $186.00 million $1.03 33.88
Pacira Pharmaceuticals $276.37 million 6.45 -$37.94 million ($1.31) -33.55

Dr. Reddy’s Laboratories has higher revenue and earnings than Pacira Pharmaceuticals. Pacira Pharmaceuticals 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.

Profitability

This table compares Dr. Reddy’s Laboratories and Pacira Pharmaceuticals’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Dr. Reddy’s Laboratories 7.91% 9.10% 5.03%
Pacira Pharmaceuticals -18.25% -13.77% -6.34%

Dividends

Dr. Reddy’s Laboratories pays an annual dividend of $0.29 per share and has a dividend yield of 0.8%. Pacira Pharmaceuticals does not pay a dividend. Dr. Reddy’s Laboratories pays out 28.2% of its earnings in the form of a dividend.

Insider & Institutional Ownership

13.7% of Dr. Reddy’s Laboratories shares are owned by institutional investors. 2.0% of Dr. Reddy’s Laboratories shares are owned by company insiders. Comparatively, 6.6% of Pacira Pharmaceuticals shares are owned by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company will outperform the market over the long term.

Analyst Ratings

This is a summary of current recommendations for Dr. Reddy’s Laboratories and Pacira Pharmaceuticals, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Dr. Reddy’s Laboratories 1 1 2 0 2.25
Pacira Pharmaceuticals 1 8 8 0 2.41

Dr. Reddy’s Laboratories presently has a consensus target price of $30.51, suggesting a potential downside of 12.58%. Pacira Pharmaceuticals has a consensus target price of $49.38, suggesting a potential upside of 12.37%. Given Pacira Pharmaceuticals’ stronger consensus rating and higher probable upside, analysts clearly believe Pacira Pharmaceuticals is more favorable than Dr. Reddy’s Laboratories.

Volatility & Risk

Dr. Reddy’s Laboratories has a beta of 0.39, meaning that its share price is 61% less volatile than the S&P 500. Comparatively, Pacira Pharmaceuticals has a beta of 2.2, meaning that its share price is 120% more volatile than the S&P 500.

Summary

Dr. Reddy’s Laboratories beats Pacira Pharmaceuticals on 8 of the 15 factors compared between the two stocks.

Dr. Reddy’s Laboratories Company Profile

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.

Pacira Pharmaceuticals Company Profile

Pacira Pharmaceuticals, Inc. is a holding company. The Company is a pharmaceutical company focused on the development, manufacture and commercialization of pharmaceutical products, based on its DepoFoam extended release drug delivery technology, for use primarily in hospitals and ambulatory surgery centers. Its lead product candidate is EXPAREL (bupivacaine liposome injectable suspension), which consists of bupivacaine, an amide-type local anesthetic, encapsulated in DepoFoam and is indicated for single-dose infiltration into the surgical site to produce postsurgical analgesia. In addition to EXPAREL, DepoFoam is also the basis for its other Food and Drug Administration-approved commercial product, DepoCyt(e), which it manufactures for its commercial partners, as well as its product candidates. The Company’s other product candidates include DepoMeloxicam (DepoMLX) and DepoTranexamic Acid (DepoTXA). DepoCyt(e) is indicated for the intrathecal treatment of lymphomatous meningitis.

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