Earnings

Dissecting the Numbers for Adamis Pharmaceuticals Corporation (ADMP) and Bio-Path Holdings, Inc. (BPTH)

Adamis Pharmaceuticals Corporation (NASDAQ:ADMP) shares are up more than 50.79% this year and recently decreased -3.16% or -$0.15 to settle at $4.60. Bio-Path Holdings, Inc. (NASDAQ:BPTH), on the other hand, is down -84.57% year to date as of 12/05/2017. It currently trades at $0.20 and has returned -25.61% during the past week.

Adamis Pharmaceuticals Corporation (NASDAQ:ADMP) and Bio-Path Holdings, Inc. (NASDAQ:BPTH) are the two most active stocks in the Drug Delivery industry based on today’s trading volumes. The market is clearly enthusiastic about both these stocks, but which is the better investment? To answer this, we will compare the two companies based on the strength of their growth, profitability, risk, returns, valuation, analyst recommendations, and insider trends.

Cash Flow 

If there’s one thing investors care more about than earnings, it’s cash flow. ADMP’s free cash flow (“FCF”) per share for the trailing twelve months was -0.12. Comparatively, BPTH’s free cash flow per share was -0.02. On a percent-of-sales basis, ADMP’s free cash flow was -0.06% while BPTH converted -22.22% 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 provide insight into the financial health of a company, and allow investors to determine the likelihood that the company will be able to continue operating as a going concern. ADMP has a current ratio of 3.90 compared to 7.50 for BPTH. This means that BPTH can more easily cover its most immediate liabilities over the next twelve months. ADMP’s debt-to-equity ratio is 0.11 versus a D/E of 0.00 for BPTH. ADMP is therefore the more solvent of the two companies, and has lower financial risk.

Valuation




ADMP trades at a P/B of 3.25, and a P/S of 11.50, compared to a P/B of 2.98, and a P/S of 1730.01 for BPTH. ADMP is the cheaper of the two stocks on sales basis but is expensive in terms of P/E and P/B ratio. 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. ADMP is currently priced at a -53.2% to its one-year price target of 9.83. Comparatively, BPTH is -86.67% relative to its price target of 1.50. This suggests that BPTH 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 ADMP and 2.00 for BPTH, which implies that analysts are equally bullish on their outlook for the two stocks.

Risk and Volatility

To gauge the market risk of a particular stock, investors use beta. Stocks with a beta above 1 are more volatile than the market as a whole. Conversely, a beta below 1 implies below average systematic risk. ADMP has a beta of 0.37 and BPTH’s beta is 3.02. ADMP’s shares are therefore the less volatile of the two stocks.

Insider Activity and Investor Sentiment

Short interest, or the percentage of a stock’s tradable shares currently being shorted, is another metric investors use to get a pulse on sentiment.ADMP has a short ratio of 3.38 compared to a short interest of 4.29 for BPTH. This implies that the market is currently less bearish on the outlook for ADMP.

Summary

Bio-Path Holdings, Inc. (NASDAQ:BPTH) beats Adamis Pharmaceuticals Corporation (NASDAQ:ADMP) on a total of 6 of the 14 factors compared between the two stocks. BPTH has a higher cash conversion rate, has higher cash flow per share, higher liquidity and has lower financial risk. BPTH is more undervalued relative to its price target. Finally, MRK has better sentiment signals based on short interest.

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