Aratana Therapeutics (NASDAQ: PETX) and Zoetis (NYSE:ZTS) are both medical companies, but which is the superior investment? We will contrast the two companies based on the strength of their valuation, earnings, analyst recommendations, dividends, risk, profitabiliy and institutional ownership.

Earnings and Valuation

This table compares Aratana Therapeutics and Zoetis’ top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Aratana Therapeutics $42.17 million 5.88 -$16.31 million ($0.75) -8.71
Zoetis $4.96 billion 6.16 $1.71 billion $1.72 36.21

Zoetis has higher revenue and earnings than Aratana Therapeutics. Aratana Therapeutics is trading at a lower price-to-earnings ratio than Zoetis, indicating that it is currently the more affordable of the two stocks.

Institutional and Insider Ownership

67.6% of Aratana Therapeutics shares are owned by institutional investors. Comparatively, 95.2% of Zoetis shares are owned by institutional investors. 5.2% of Aratana Therapeutics shares are owned by insiders. Comparatively, 0.3% of Zoetis shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Analyst Ratings

This is a summary of recent recommendations for Aratana Therapeutics and Zoetis, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Aratana Therapeutics 0 0 6 0 3.00
Zoetis 1 5 12 0 2.61

Aratana Therapeutics currently has a consensus price target of $10.40, suggesting a potential upside of 59.26%. Zoetis has a consensus price target of $63.06, suggesting a potential upside of 1.25%. Given Aratana Therapeutics’ stronger consensus rating and higher probable upside, equities research analysts plainly believe Aratana Therapeutics is more favorable than Zoetis.

Volatility and Risk

Aratana Therapeutics has a beta of 3.4, indicating that its share price is 240% more volatile than the S&P 500. Comparatively, Zoetis has a beta of 1.02, indicating that its share price is 2% more volatile than the S&P 500.

Dividends

Zoetis pays an annual dividend of $0.42 per share and has a dividend yield of 0.7%. Aratana Therapeutics does not pay a dividend. Zoetis pays out 24.4% of its earnings in the form of a dividend. Aratana Therapeutics has raised its dividend for 3 consecutive years.

Profitability

This table compares Aratana Therapeutics and Zoetis’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Aratana Therapeutics -66.72% -14.95% -9.42%
Zoetis 17.25% 65.35% 13.06%

Summary

Zoetis beats Aratana Therapeutics on 10 of the 16 factors compared between the two stocks.

About Aratana Therapeutics

Aratana Therapeutics, Inc. is a pet therapeutics company focused on licensing, developing and commercializing of biopharmaceutical products for companion animals. The Company’s portfolio includes therapeutic candidates in development consisting of small molecule pharmaceuticals and large molecule biologics that target medical conditions in pets. Its lead product candidates in development include small molecules directed at treating osteoarthritis pain and inflammation (AT-001 for dogs, also known as grapiprant for dogs or GALLIPRANT), appetite stimulation (AT-002 for dogs, also known as capromorelin for dogs or ENTYCE) and post-operative pain (AT-003 for dogs, also known as bupivacaine liposome injectable suspension for dogs or NOCITA). AT-001 is a selective antagonist of the prostaglandin E2 (PGE 2) EP4 receptor (EP4 prostaglandin receptor antagonist or EP4 PRA). AT-002 is a potent and selective ghrelin agonist. Its product candidates also include AT-014, AT-016 and AT-018 for dogs.

About Zoetis

Zoetis Inc. is engaged in the discovery, development, manufacture and commercialization of animal health medicines and vaccines, with a focus on both livestock and companion animals. The Company has a business, commercializing products across eight core species: cattle, swine, poultry, sheep and fish (collectively, livestock) and dogs, cats and horses (collectively, companion animals), and within five product categories: anti-infectives, vaccines, parasiticides, medicated feed additives and other pharmaceuticals. The Company’s segments include the United States and International. Within each of these operating segments, it offers a product portfolio for both livestock and companion animal customers. Its livestock products include Ceftiofur injectable line, Draxxin, Spectramast, Bovi-Shield line, Rispoval line, Suvaxyn/Fostera, Embrex devices and Lutalyse. Its companion animal products include Clavamox/Synulox, Convenia, ProHeart, Revolution/Stronghold, Apoquel, Cerenia and Rimadyl.

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