Aralez Pharmaceuticals (NASDAQ: ARLZ) and Eli Lilly and (NYSE:LLY) are both medical companies, but which is the better business? We will compare the two companies based on the strength of their risk, institutional ownership, profitability, earnings, valuation, dividends and analyst recommendations.

Volatility & Risk

Aralez Pharmaceuticals has a beta of 1.34, suggesting that its stock price is 34% more volatile than the S&P 500. Comparatively, Eli Lilly and has a beta of 0.34, suggesting that its stock price is 66% less volatile than the S&P 500.

Institutional and Insider Ownership

23.9% of Aralez Pharmaceuticals shares are owned by institutional investors. Comparatively, 75.8% of Eli Lilly and shares are owned by institutional investors. 6.7% of Aralez Pharmaceuticals shares are owned by insiders. Comparatively, 0.2% of Eli Lilly and shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.

Earnings & Valuation

This table compares Aralez Pharmaceuticals and Eli Lilly and’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Aralez Pharmaceuticals $87.22 million 1.10 -$55.02 million ($1.64) -0.88
Eli Lilly and $22.00 billion 3.98 $5.99 billion $2.31 35.97

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

Analyst Recommendations

This is a summary of current recommendations for Aralez Pharmaceuticals and Eli Lilly and, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Aralez Pharmaceuticals 0 0 3 0 3.00
Eli Lilly and 1 6 11 0 2.56

Aralez Pharmaceuticals presently has a consensus price target of $8.00, indicating a potential upside of 455.56%. Eli Lilly and has a consensus price target of $88.94, indicating a potential upside of 7.04%. Given Aralez Pharmaceuticals’ stronger consensus rating and higher possible upside, research analysts plainly believe Aralez Pharmaceuticals is more favorable than Eli Lilly and.

Profitability

This table compares Aralez Pharmaceuticals and Eli Lilly and’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Aralez Pharmaceuticals -122.35% -90.17% -22.15%
Eli Lilly and 11.12% 28.71% 10.74%

Dividends

Eli Lilly and pays an annual dividend of $2.08 per share and has a dividend yield of 2.5%. Aralez Pharmaceuticals does not pay a dividend. Eli Lilly and pays out 90.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Eli Lilly and has raised its dividend for 2 consecutive years.

Summary

Eli Lilly and beats Aralez Pharmaceuticals on 11 of the 16 factors compared between the two stocks.

About Aralez Pharmaceuticals

Aralez Pharmaceuticals Inc. is a Canada-based specialty pharmaceutical company. The Company focuses on acquiring, developing and commercializing products in cardiovascular, pain and other areas. The Company’s products include Fibricor, Cambia, Fiorinal, Fiorinal C, Soriatane, Bezalip SR, NeoVisc, Uracyst, Durela, Proferrin, Resultz and Collatamp G. Its development products include YOSPRALA and Bilastine. Fibricor (fenofibric acid) is indicated as a complementary therapy along with diet for the treatment of hypertriglyceridemia, and as a complementary therapy along with diet to reduce elevated low-density lipoprotein cholesterol (LDL-C), total cholesterol (Total-C), triglycerides (TG) and apolipoprotein B (Apo B). Fibricor is also used to increase high-density lipoprotein (HDL) cholesterol (HDL-C) in patients with hypercholesterolemia or mixed dyslipidemia. Cambia (diclofenac potassium for oral solution) is a non-steroidal anti-inflammatory drug (NSAID).

About Eli Lilly and

Eli Lilly and Company is engaged in drug manufacturing business. The Company discovers, develops, manufactures and markets products in two segments: human pharmaceutical products and animal health products. The Company’s human pharmaceutical business segment sells medicines, which are discovered or developed by its scientists. Its animal health business segment operates through the Company’s Elanco division, which develops, manufactures and markets products for both food animals and companion animals. The Company’s human pharmaceutical products include endocrinology products, neuroscience products, oncology products, immunology products and cardiovascular products. The Company’s animal health products segment includes products for food animals and products for companion animals. As of December 31, 2016, the Company manufactured and distributed its products through facilities in the United States, Puerto Rico and 14 other countries.

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