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

Insider & Institutional Ownership

15.3% of Dr. Reddy’s Laboratories shares are owned by institutional investors. Comparatively, 98.2% of Aquinox Pharmaceuticals shares are owned by institutional investors. 2.0% of Dr. Reddy’s Laboratories shares are owned by company insiders. Comparatively, 2.7% of Aquinox Pharmaceuticals shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Dividends

Dr. Reddy’s Laboratories pays an annual dividend of $0.29 per share and has a dividend yield of 1.0%. Aquinox Pharmaceuticals does not pay a dividend. Dr. Reddy’s Laboratories pays out 27.9% of its earnings in the form of a dividend.

Analyst Recommendations

This is a breakdown of recent ratings and target prices for Dr. Reddy’s Laboratories and Aquinox Pharmaceuticals, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Dr. Reddy’s Laboratories 1 1 0 0 1.50
Aquinox Pharmaceuticals 0 0 4 0 3.00

Aquinox Pharmaceuticals has a consensus target price of $24.67, indicating a potential upside of 70.59%. Given Aquinox Pharmaceuticals’ stronger consensus rating and higher probable upside, analysts clearly believe Aquinox Pharmaceuticals is more favorable than Dr. Reddy’s Laboratories.

Profitability

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

Net Margins Return on Equity Return on Assets
Dr. Reddy’s Laboratories 7.92% 9.27% 5.06%
Aquinox Pharmaceuticals N/A -29.54% -27.88%

Earnings & Valuation

This table compares Dr. Reddy’s Laboratories and Aquinox Pharmaceuticals’ gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Dr. Reddy’s Laboratories $2.20 billion 2.27 $385.62 million $1.04 28.95
Aquinox Pharmaceuticals N/A N/A N/A ($1.89) -7.65

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

Volatility & Risk

Dr. Reddy’s Laboratories has a beta of 0.33, indicating that its share price is 67% less volatile than the S&P 500. Comparatively, Aquinox Pharmaceuticals has a beta of -17.03, indicating that its share price is 1,803% less volatile than the S&P 500.

Summary

Dr. Reddy’s Laboratories beats Aquinox Pharmaceuticals on 7 of the 13 factors compared between the two stocks.

About Dr. Reddy’s Laboratories

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.

About Aquinox Pharmaceuticals

Aquinox Pharmaceuticals, Inc. is a clinical-stage pharmaceutical company discovering and developing targeted therapeutics in disease areas of inflammation and immuno-oncology. The Company’s primary focus is anti-inflammatory product candidates targeting the Src Homology 2 (SH2)-containing inositol-5-phosphatase 1 (SHIP1) enzyme, which is a regulator of a cellular signaling pathway in immune cells, known as the phosphatidylinositol-4,5-bisphosphate 3-kinase (PI3K) pathway. Its product candidate, AQX-1125, is a small molecule activator of SHIP1 suitable for oral, once daily dosing. The Company is developing AQX-1125 as a treatment in interstitial cystitis/bladder pain syndrome (IC/BPS), a chronic inflammatory disease of the bladder. AQX-1125 is a SHIP1 activator that has demonstrated preliminary safety, anti-inflammatory potential and drug properties in multiple preclinical studies.

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