The shares of Akorn, Inc. (NASDAQ:AKRX) and Arrowhead Pharmaceuticals, Inc. (NASDAQ:ARWR) were among the active stocks of the last trading sessions. Akorn, Inc. (NASDAQ:AKRX) declined to -1.25% closing at the price of $6.34 whereas the shares of Arrowhead Pharmaceuticals, Inc. (NASDAQ:ARWR) soared 1.9% with the increase of 0.24 points closing at the price of $12.88. Akorn, Inc. has currently decrease -65.6% in its stock over the period of 6-months while its rival Arrowhead Pharmaceuticals, Inc. added 78.39% in the previous 6-months.
Now we have to analyze the facts that if the stocks were worthy off investors’ money? The facts to analyze here are risks, profitability, returns and price trends.
Returns and Profitability
Profitability and returns are the main reason of investment, the investors are looking for profits that they get and return they should expect over the period of time.
The first and foremost return that is considered while making an investment is the ROI or Return on Investment. The ROI is the ratio between the profit against the cost of investment. Currently the ROI of Akorn, Inc. (NASDAQ:AKRX) is -0.6% while the ROI of Arrowhead Pharmaceuticals, Inc. (NASDAQ:ARWR) is -44.1%. Another figure that is to be considered while analyzing the profitability of a share is its EBITDA margin, AKRX’s EBITDA Margin is 19.94 whereas ARWR’s is -24.58.
Both the profitability ratios suggest that Akorn, Inc. (NASDAQ:AKRX) is more suitable investment in terms of profitability and return.
EPS & Surprise Factor
Akorn, Inc. (NASDAQ:AKRX) reported $0.16/share EPS for the previous quarter where analysts were predicting an EPS to be $0.11/share Thus beating the analyst Estimates with a Surprise Factor of 45.5 Percent. While, Arrowhead Pharmaceuticals, Inc. (NASDAQ:ARWR) reported EPS of $-0.18/share in the last quarter. The analysts projected EPS of $-0.18/share depicting a Surprise of 0 Percent.
Taking a look at Earnings per Share, Akorn, Inc. tends to be beating the analyst estimates more than Arrowhead Pharmaceuticals, Inc.. so AKRX is more profitable than ARWR.
Technical Analysis of Akorn, Inc. & Arrowhead Pharmaceuticals, Inc.
Moving average convergence divergence (MACD) shows that Akorn, Inc. (NASDAQ:AKRX) is on a PRICE RELATIVITY trend While Arrowhead Pharmaceuticals, Inc. (NASDAQ:ARWR) is on PRICE RELATIVITY trend. The trend for the past 10-days shows that the Akorn, Inc. was in BEARISH territory and Arrowhead Pharmaceuticals, Inc. was in BEARISH territory.
AKRX’s current statistics gauge that the stock candle is BEARISH with HIGH volatility. While ARWR’s candle is BULLISH with HIGH.
EPS Growth Rate: AKRX’s 15% versus ARWR’s 7.33%
Another shareholder value can be analyzed through the EPS growth rate; the next 5 years EPS growth rate is predicted by the analysts after the analyzing the previous trends. The next 5 year EPS growth rate of Akorn, Inc. (NASDAQ:AKRX) is predicted at 15% while Arrowhead Pharmaceuticals, Inc. (NASDAQ:ARWR) stands at 7.33%. These numbers suggest that AKRX is more suitable investment in terms of EPS growth rate.
Financial Risk and Liquidity Concerns
The current ratio and the debt ratio are the two ratios that show the investor how quickly the company is able to payout its debt and how quickly it can cover its obligations. The current ratio of AKRX stands at 3.9 while ARWR is at 8.7 whereas the debt ratio of the prior is 1.13 while the debt ratio of the later is 0.02.
The values of the both ratios suggest that one is more liquid and other investment is more risk free.
While making an investment, another main factor to consider before investing is the analyst recommendation on the scale of 1 to 5 where 1 is strong buy, 2 is buy, 3 is hold, 4 is Sell and 5 is strong sell. Analyst recommend 2.9 for AKRX and 1.7 for ARWR which means AKRX has Hold rating whereas ARWR has Buy rating.
Another recommendation of analyst that is to be considered worthy is the price target. The mare price or price trend does not suggest the suitability of a stock. The price target set by analyst is also to be considered while investing as it suggests to what extent the stock will rise or fall in the near future. The price target set for AKRX is $8 which is 20.75% of its current price while ARWR has price target of 23.3 which is 44.72% of its current price.
Valuation is the process of determining the company’s worth for an investor, the valuation ratios give an insight to that worthiness.
AKRX currently has price to earning P/E ratio of 0 whereas ARWR has 0 while the forward P/E ratio for the prior stands at 13.55 and for the later it depicts the value of 0.
The price to Book P/B for AKRX is 1.1, Price to Sale is at 1.04 and for ARWR these ratios stand at 11.01 and 86.7.