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Comparing Antares Pharma, Inc. (ATRS) and Azul S.A. (AZUL)

Antares Pharma, Inc. (NASDAQ:ATRS) shares are up more than 64.82% this year and recently decreased -2.96% or -$0.1 to settle at $3.28. Azul S.A. (NYSE:AZUL), on the other hand, is down -33.40% year to date as of 09/11/2018. It currently trades at $15.87 and has returned -1.37% during the past week.

Antares Pharma, Inc. (NASDAQ:ATRS) and Azul S.A. (NYSE:AZUL) are the two most active stocks in the Medical Instruments & Supplies industry based on today’s trading volumes. Investors are clearly interested in the two names, but is one a better choice than the other? We will compare the two companies across growth, profitability, risk, valuation, and insider trends to answer this question.

Profitability and Returns

A high growth rate isn’t necessarily valuable to investors. In fact, companies that overinvest in low return projects just to achieve a high growth rate can actually destroy shareholder value. Profitability and returns are a measure of the quality of a company’s business and its growth opportunities. We’ll use Return on Investment (ROI) to measure this. ATRS’s ROI is -28.20% while AZUL has a ROI of 12.60%. The interpretation is that AZUL’s business generates a higher return on investment than ATRS’s.

Cash Flow

The value of a stock is simply the present value of its future free cash flows. ATRS’s free cash flow (“FCF”) per share for the trailing twelve months was -0.03. Comparatively, AZUL’s free cash flow per share was -0.08. On a percent-of-sales basis, ATRS’s free cash flow was -0.01% while AZUL converted -1.06% of its revenues into cash flow. This means that, for a given level of sales, ATRS is able to generate more free cash flow for investors.

Liquidity and Financial Risk



Balance sheet risk is one of the biggest factors to consider before investing. ATRS has a current ratio of 2.30 compared to 0.90 for AZUL. This means that ATRS can more easily cover its most immediate liabilities over the next twelve months. ATRS’s debt-to-equity ratio is 1.02 versus a D/E of 1.34 for AZUL. AZUL is therefore the more solvent of the two companies, and has lower financial risk.

Valuation

ATRS trades at a forward P/E of 68.33, a P/B of 20.50, and a P/S of 9.22, compared to a forward P/E of 6.48, a P/B of 2.62, and a P/S of 0.80 for AZUL. ATRS is the expensive of the two stocks on an earnings, book value and sales basis. 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

Investors often compare a stock’s current price to an analyst price target to get a sense of the potential upside within the next year. ATRS is currently priced at a -24.07% to its one-year price target of 4.32. Comparatively, AZUL is -45.85% relative to its price target of 29.31. This suggests that AZUL is the better investment over the next year.

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. ATRS has a short ratio of 5.14 compared to a short interest of 3.52 for AZUL. This implies that the market is currently less bearish on the outlook for AZUL.

Summary

Azul S.A. (NYSE:AZUL) beats Antares Pharma, Inc. (NASDAQ:ATRS) on a total of 7 of the 14 factors compared between the two stocks. AZUL has higher cash flow per share. In terms of valuation, AZUL is the cheaper of the two stocks on an earnings, book value and sales basis, AZUL is more undervalued relative to its price target. Finally, AZUL has better sentiment signals based on short interest.

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