Physicians Realty Trust (NYSE:DOC) shares are down more than -19.40% this year and recently decreased -2.82% or -$0.42 to settle at $14.50. Apricus Biosciences, Inc. (NASDAQ:APRI), on the other hand, is down -85.89% year to date as of 04/20/2018. It currently trades at $0.26 and has returned -38.19% during the past week.
Physicians Realty Trust (NYSE:DOC) and Apricus Biosciences, Inc. (NASDAQ:APRI) are the two most active stocks in the REIT – Healthcare Facilities 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.Growth
One of the key things investors look for in a company is the ability to grow earnings at a high compound rate over time. Analysts expect DOC to grow earnings at a 9.70% annual rate over the next 5 years.Profitability and Returns
Growth isn’t very attractive to investors if companies are sacrificing profitability and shareholder returns to achieve that growth. We will use EBITDA margin and Return on Investment (ROI), which control for differences in capital structure between the two companies, to measure profitability and return. Physicians Realty Trust (DOC) has an EBITDA margin of 47.89%. This suggests that DOC underlying business is more profitableCash Flow
Earnings don’t always accurately reflect the amount of cash that a company brings in. DOC’s free cash flow (“FCF”) per share for the trailing twelve months was +0.01. Comparatively, APRI’s free cash flow per share was -0.16.Liquidity and Financial Risk
DOC’s debt-to-equity ratio is 0.60 versus a D/E of 0.00 for APRI. DOC is therefore the more solvent of the two companies, and has lower financial risk.
DOC trades at a forward P/E of 48.01, a P/B of 1.05, and a P/S of 8.29, compared to a P/B of 0.90, for APRI. DOC 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
A cheap stock isn’t a good investment if the stock is priced accurately. To get a sense of “value” we must compare the current price to some measure of intrinsic value such as a price target. DOC is currently priced at a -17.57% to its one-year price target of 17.59. Comparatively, APRI is -79.2% relative to its price target of 1.25. This suggests that APRI is the better investment over the next year.
Risk and Volatility
Analyst use beta to measure a stock’s volatility relative to the overall market. Stocks with a beta above 1 tend to have bigger swings in price than the market as a whole, the opposite being the case for stocks with a beta below 1. DOC has a beta of 0.43 and APRI’s beta is 1.34. DOC’s shares are therefore the less volatile of the two stocks.Insider Activity and Investor Sentiment
Analysts often look at short interest, or the percentage of a company’s float currently being shorted by investors, to aid in their outlook for a particular stock. DOC has a short ratio of 2.60 compared to a short interest of 1.00 for APRI. This implies that the market is currently less bearish on the outlook for APRI.Summary
Apricus Biosciences, Inc. (NASDAQ:APRI) beats Physicians Realty Trust (NYSE:DOC) on a total of 7 of the 13 factors compared between the two stocks. APRI is growing fastly and has lower financial risk. In terms of valuation, APRI is the cheaper of the two stocks on an earnings, book value and sales basis, APRI is more undervalued relative to its price target. Finally, APRI has better sentiment signals based on short interest.