Eli Lilly and (LLY) versus AMAG Pharmaceuticals (AMAG) Critical Contrast

Eli Lilly and (NYSE: LLY) and AMAG Pharmaceuticals (NASDAQ:AMAG) are both medical companies, but which is the better investment? We will contrast the two businesses based on the strength of their dividends, profitability, institutional ownership, earnings, valuation, risk and analyst recommendations.

Dividends

Eli Lilly and pays an annual dividend of $2.08 per share and has a dividend yield of 2.5%. AMAG Pharmaceuticals does not pay a dividend. Eli Lilly and pays out 98.6% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. AMAG Pharmaceuticals has raised its dividend for 2 consecutive years.

Insider & Institutional Ownership

76.3% of Eli Lilly and shares are held by institutional investors. 0.2% of Eli Lilly and shares are held by company insiders. Comparatively, 3.8% of AMAG Pharmaceuticals shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Profitability

This table compares Eli Lilly and and AMAG Pharmaceuticals’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Eli Lilly and 9.90% 30.27% 10.82%
AMAG Pharmaceuticals -35.35% -0.64% -0.25%

Earnings and Valuation

This table compares Eli Lilly and and AMAG Pharmaceuticals’ gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Eli Lilly and $21.22 billion 4.38 $2.74 billion $2.11 40.03
AMAG Pharmaceuticals $532.09 million 0.88 -$2.48 million ($6.08) -2.18

Eli Lilly and has higher revenue and earnings than AMAG Pharmaceuticals. AMAG Pharmaceuticals is trading at a lower price-to-earnings ratio than Eli Lilly and, indicating that it is currently the more affordable of the two stocks.

Analyst Ratings

This is a summary of recent ratings for Eli Lilly and and AMAG Pharmaceuticals, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Eli Lilly and 1 5 9 0 2.53
AMAG Pharmaceuticals 1 11 3 0 2.13

Eli Lilly and presently has a consensus price target of $91.60, indicating a potential upside of 8.45%. AMAG Pharmaceuticals has a consensus price target of $23.58, indicating a potential upside of 77.99%. Given AMAG Pharmaceuticals’ higher probable upside, analysts clearly believe AMAG Pharmaceuticals is more favorable than Eli Lilly and.

Risk & Volatility

Eli Lilly and has a beta of 0.35, indicating that its stock price is 65% less volatile than the S&P 500. Comparatively, AMAG Pharmaceuticals has a beta of 0.79, indicating that its stock price is 21% less volatile than the S&P 500.

Summary

Eli Lilly and beats AMAG Pharmaceuticals on 12 of the 17 factors compared between the two stocks.

About Eli Lilly and

Eli Lilly and Company is engaged in drug manufacturing business. The Company discovers, develops, manufactures and markets products in two segments: human pharmaceutical products and animal health products. The Company’s human pharmaceutical business segment sells medicines, which are discovered or developed by its scientists. Its animal health business segment operates through the Company’s Elanco division, which develops, manufactures and markets products for both food animals and companion animals. The Company’s human pharmaceutical products include endocrinology products, neuroscience products, oncology products, immunology products and cardiovascular products. The Company’s animal health products segment includes products for food animals and products for companion animals. As of December 31, 2016, the Company manufactured and distributed its products through facilities in the United States, Puerto Rico and 14 other countries.

About AMAG Pharmaceuticals

AMAG Pharmaceuticals, Inc. is a pharmaceutical company. The Company’s segment is the manufacture, development and commercialization of products and services for use in treating various conditions, with a focus on maternal health, anemia management and cancer supportive care. Its offerings focus on maternal health, anemia management and cancer supportive care, including its product, Makena (hydroxyprogesterone caproate injection); services related to the collection, processing and storage of umbilical cord blood stem cell and cord tissue units operated through Cord Blood Registry (CBR); its product, Feraheme (ferumoxytol), for intravenous (IV) use, and MuGard Mucoadhesive Oral Wound Rinse. It is engaged in the development of Digoxin immune fab, a polyclonal antibody for the treatment of severe preeclampsia in pregnant women. Makena is a drug indicated to reduce the risk of preterm birth in women pregnant with a single baby having a history of singleton spontaneous preterm birth.

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