Tetraphase Pharmaceuticals (NASDAQ: TTPH) and GlaxoSmithKline PLC (NYSE:GSK) are both healthcare companies, but which is the superior stock? We will compare the two businesses based on the strength of their valuation, profitability, institutional ownership, analyst recommendations, risk, earnings and dividends.

Insider and Institutional Ownership

47.4% of Tetraphase Pharmaceuticals shares are held by institutional investors. Comparatively, 9.8% of GlaxoSmithKline PLC shares are held by institutional investors. 5.5% of Tetraphase Pharmaceuticals shares are held by insiders. Comparatively, 10.0% of GlaxoSmithKline PLC shares are held by 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 Recommendations

This is a summary of recent ratings and recommmendations for Tetraphase Pharmaceuticals and GlaxoSmithKline PLC, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Tetraphase Pharmaceuticals 0 1 4 0 2.80
GlaxoSmithKline PLC 2 8 5 0 2.20

Tetraphase Pharmaceuticals currently has a consensus price target of $17.00, indicating a potential upside of 147.09%. GlaxoSmithKline PLC has a consensus price target of $43.50, indicating a potential upside of 24.07%. Given Tetraphase Pharmaceuticals’ stronger consensus rating and higher probable upside, research analysts clearly believe Tetraphase Pharmaceuticals is more favorable than GlaxoSmithKline PLC.

Profitability

This table compares Tetraphase Pharmaceuticals and GlaxoSmithKline PLC’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Tetraphase Pharmaceuticals -1,382.33% -88.27% -77.53%
GlaxoSmithKline PLC 7.79% 115.30% 9.69%

Risk & Volatility

Tetraphase Pharmaceuticals has a beta of 2.52, suggesting that its share price is 152% more volatile than the S&P 500. Comparatively, GlaxoSmithKline PLC has a beta of 1, suggesting that its share price has a similar volatility profile to the S&P 500.

Earnings and Valuation

This table compares Tetraphase Pharmaceuticals and GlaxoSmithKline PLC’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio NetIncome Earnings Per Share Price/Earnings Ratio
Tetraphase Pharmaceuticals $5.14 million 68.83 -$77.48 million ($2.87) -2.40
GlaxoSmithKline PLC $37.82 billion 2.28 $1.24 billion $1.26 27.83

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

Dividends

GlaxoSmithKline PLC pays an annual dividend of $1.99 per share and has a dividend yield of 5.7%. Tetraphase Pharmaceuticals does not pay a dividend. GlaxoSmithKline PLC pays out 157.9% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Summary

GlaxoSmithKline PLC beats Tetraphase Pharmaceuticals on 9 of the 15 factors compared between the two stocks.

About Tetraphase Pharmaceuticals

Tetraphase Pharmaceuticals, Inc. is a clinical-stage biopharmaceutical company. The Company uses its chemistry technology to create antibiotics for multidrug-resistant infections. The Company is developing its lead product candidate, eravacycline, a fully synthetic tetracycline derivative, as a spectrum intravenous (IV) and oral antibiotic for use as a first-line empiric monotherapy for the treatment of multidrug-resistant infections, including multidrug-resistant gram-negative infections. The Company also develops TP-6076 for multidrug-resistant gram-negative infections. Eravacycline is a fluorocycline antibiotic. The Company is conducting a global Phase III clinical program for eravacycline called Investigating Gram-Negative Infections Treated with Eravacycline (IGNITE). TP-271 is a fully synthetic fluorocycline being developed for respiratory disease caused by bacterial biothreat pathogens in healthy volunteers.

About GlaxoSmithKline PLC

GlaxoSmithKline plc is a global healthcare company. The Company operates through three segments: Pharmaceuticals, Vaccines and Consumer Healthcare. The Company focuses on its research across six areas: Respiratory diseases, human immunodeficiency virus (HIV)/infectious diseases, Vaccines, Immuno-inflammation, Oncology and Rare diseases. The Company makes a range of prescription medicines, vaccines and consumer healthcare products. The Pharmaceuticals business discovers, develops and commercializes medicines to treat a range of acute and chronic diseases. The Vaccines business provides vaccines for people of all ages from babies and adolescents to adults and older people. The Consumer Healthcare business develops and markets products in Wellness, Oral health, Nutrition and Skin health categories. Its product portfolio includes Adartrel, Bexsero, Daraprim and Quinvaxem. Its brands include Panadol, abreva, polident and physiogel.

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