Analyzing Waters (NYSE:WAT) and Evotec (OTCMKTS:EVTCY)

Evotec (OTCMKTS:EVTCY) and Waters (NYSE:WAT) are both healthcare companies, but which is the better investment? We will compare the two businesses based on the strength of their earnings, profitability, risk, analyst recommendations, dividends, valuation and institutional ownership.

Profitability

This table compares Evotec and Waters’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Evotec	20.85%	16.02%	7.81%
Waters	3.58%	11.27%	6.73%

Analyst Ratings

This is a breakdown of current ratings and target prices for Evotec and Waters, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Evotec	0	0	0	0	0.00
Waters	0	8	9	3	2.75

Waters has a consensus price target of $418.10, suggesting a potential upside of 2.74%. Given Waters’ stronger consensus rating and higher possible upside, analysts clearly believe Waters is more favorable than Evotec.

Earnings & Valuation

This table compares Evotec and Waters”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Evotec	$572.16 million	1.15	$7.14 million	$0.41	4.88
Waters	$4.64 billion	8.60	$642.63 million	$4.01	101.48

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

Institutional & Insider Ownership

94.0% of Waters shares are owned by institutional investors. 0.3% of Waters shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Risk and Volatility

Evotec has a beta of 0.98, meaning that its stock price is 2% less volatile than the S&P 500. Comparatively, Waters has a beta of 1.19, meaning that its stock price is 19% more volatile than the S&P 500.

Summary

Waters beats Evotec on 12 of the 15 factors compared between the two stocks.

About Evotec

Evotec SE engages in the discovery and development of new drugs for pharmaceutical and biotechnology companies. It operates through the following segments: EVT Execute and EVT Innovate. The EVT Execute segment provides stand-alone or integrated drug discovery solutions for collaborators targets and programmers on a typical fee-for-service basis or through a variety of commercial structures, which may include performance-based components, such as milestones and royalties. The EVT Innovate develops drug discovery projects, assets and platforms, both internally or through academic collaborations. The company was founded by Manfred Eigen, Karsten Henco, Ulrich Aldag, Freimut Leidenberger, Heinrich Maria Schulte, Rudolf Rigler, and Charles Weissmann on December 8, 1993 and is headquartered in Hamburg, Germany.

About Waters

Waters Corporation provides analytical workflow solutions in Asia, the Americas, and Europe. It operates through two segments: Waters and TA. The company designs, manufactures, sells, and services high and ultra-performance liquid chromatography, as well as mass spectrometry (MS) technology systems and support products, including chromatography columns, other consumable products, and post-warranty service plans. It also designs, manufactures, sells, and services thermal analysis, rheometry, and calorimetry instruments; and develops and supplies software-based products that interface with its instruments, as well as other manufacturers' instruments. In addition, the company offers MS technology instruments are used in drug discovery and development comprising clinical trial testing, the analysis of proteins in disease processes, nutritional safety analysis, and environmental testing. Further, the company provides thermal analysis, rheometry, and calorimetry instruments for use in predicting the suitability and stability of fine chemicals, pharmaceuticals, water, polymers, metals, and viscous liquids for various industrial, consumer good, and healthcare products, as well as for life science research. Its products are used by clinical, pharmaceutical, biochemical, industrial, nutritional safety, environmental, academic, and governmental customers working in research and development, quality assurance, and other laboratory applications. The company was founded in 1958 and is headquartered in Milford, Massachusetts.