Adamis Pharmaceuticals Corporation (NASDAQ:ADMP), on the other hand, is up 50.79% year to date as of 10/16/2017. It currently trades at $4.75 and has returned -9.52% during the past week.
Delcath Systems, Inc. (NASDAQ:DCTH) and Adamis Pharmaceuticals Corporation (NASDAQ:ADMP) are the two most active stocks in the Drug Delivery industry based on today’s trading volumes. To determine if one is a better investment than the other, we will compare the two companies’ growth, profitability, risk, return, and valuation characteristics, as well as their analyst ratings and sentiment signals.
Companies that can increase earnings at a high compound rate over time are attractive to investors. Analysts expect DCTH to grow earnings at a 15.00% annual rate over the next 5 years.
Profitability and Returns
Growth doesn’t mean much if it comes at the cost of weak profitability. To adjust for differences in capital structure we’ll use EBITDA margin and Return on Investment (ROI) as measures of profitability and return. Delcath Systems, Inc. (DCTH) has an EBITDA margin of 851.35%. This suggests that DCTH underlying business is more profitable DCTH’s ROI is -139.30% while ADMP has a ROI of -63.10%. The interpretation is that ADMP’s business generates a higher return on investment than DCTH’s.
If there’s one thing investors care more about than earnings, it’s cash flow. DCTH’s free cash flow (“FCF”) per share for the trailing twelve months was -0.02. Comparatively, ADMP’s free cash flow per share was -0.15. On a percent-of-sales basis, DCTH’s free cash flow was -0.49% while ADMP converted -0.07% of its revenues into cash flow. This means that, for a given level of sales, ADMP is able to generate more free cash flow for investors.
Liquidity and Financial Risk
Liquidity and leverage ratios measure a company’s ability to meet short-term obligations and longer-term debts. DCTH has a current ratio of 1.00 compared to 2.20 for ADMP. This means that ADMP can more easily cover its most immediate liabilities over the next twelve months. DCTH’s debt-to-equity ratio is 14.00 versus a D/E of 0.16 for ADMP. DCTH is therefore the more solvent of the two companies, and has lower financial risk.
DCTH trades at a P/S of 8.68, compared to a P/B of 3.68, and a P/S of 13.88 for ADMP. Given that earnings are what matter most to investors, analysts tend to place a greater weight on the P/E.
Analyst Price Targets and Opinions
A cheap stock is not necessarily a value stock. Most of the time, a stock is cheap for good reason. A stock only has value if the current price is substantially below the price at which it should trade in the future. DCTH is currently priced at a -99.75% to its one-year price target of 16.00. Comparatively, ADMP is -51.68% relative to its price target of 9.83. This suggests that DCTH is the better investment over the next year.
The average investment recommendation on a scale of 1 to 5 (1 being a strong buy, 3 a hold, and 5 a sell) is 2.00 for DCTH and 2.00 for ADMP, which implies that analysts are equally bullish on their outlook for the two stocks.
Risk and Volatility
Beta is a metric that investors frequently use to analyze a stock’s systematic risk. A beta above 1 implies above average market volatility. Conversely, a stock with a beta below 1 is seen as less risky than the overall market. DCTH has a beta of 0.00 and ADMP’s beta is 0.45. DCTH’s shares are therefore the less volatile of the two stocks.
Insider Activity and Investor Sentiment
The analysis of insider buying and selling trends can be extended to the aggregate level. Short interest, which represents the percentage of a stock’s tradable shares currently being shorted, captures what the market as a whole feels about a stock. DCTH has a short ratio of 1.17 compared to a short interest of 3.90 for ADMP. This implies that the market is currently less bearish on the outlook for DCTH.
Delcath Systems, Inc. (NASDAQ:DCTH) beats Adamis Pharmaceuticals Corporation (NASDAQ:ADMP) on a total of 8 of the 14 factors compared between the two stocks. DCTH is growing fastly, is more profitable and has higher cash flow per share. In terms of valuation, DCTH is the cheaper of the two stocks on book value and sales basis, DCTH is more undervalued relative to its price target. Finally, DCTH has better sentiment signals based on short interest.