Critical Review: Baxter International (BAX) and Arch Therapeutics (ARTH)

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Baxter International (NYSE:BAX) and Arch Therapeutics (OTCMKTS:ARTH) are both medical companies, but which is the superior stock? We will compare the two businesses based on the strength of their profitability, institutional ownership, risk, valuation, analyst recommendations, dividends and earnings.

Dividends

Baxter International pays an annual dividend of $0.76 per share and has a dividend yield of 1.1%. Arch Therapeutics does not pay a dividend. Baxter International pays out 30.6% of its earnings in the form of a dividend.

Institutional and Insider Ownership

83.1% of Baxter International shares are held by institutional investors. Comparatively, 0.0% of Arch Therapeutics shares are held by institutional investors. 0.1% of Baxter International shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock is poised for long-term growth.

Analyst Recommendations

This is a breakdown of recent recommendations for Baxter International and Arch Therapeutics, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Baxter International 1 5 8 0 2.50
Arch Therapeutics 0 0 4 0 3.00

Baxter International currently has a consensus price target of $76.62, suggesting a potential upside of 7.53%. Arch Therapeutics has a consensus price target of $3.00, suggesting a potential upside of 689.47%. Given Arch Therapeutics’ stronger consensus rating and higher possible upside, analysts clearly believe Arch Therapeutics is more favorable than Baxter International.

Profitability

This table compares Baxter International and Arch Therapeutics’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Baxter International 8.29% 16.63% 8.92%
Arch Therapeutics N/A -254.30% -115.86%

Volatility and Risk

Baxter International has a beta of 0.77, suggesting that its stock price is 23% less volatile than the S&P 500. Comparatively, Arch Therapeutics has a beta of 0.7, suggesting that its stock price is 30% less volatile than the S&P 500.

Valuation & Earnings

This table compares Baxter International and Arch Therapeutics’ revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Baxter International $10.56 billion 3.60 $717.00 million $2.48 28.73
Arch Therapeutics N/A N/A -$7.78 million N/A N/A

Baxter International has higher revenue and earnings than Arch Therapeutics.

Summary

Baxter International beats Arch Therapeutics on 10 of the 13 factors compared between the two stocks.

Baxter International Company Profile

Baxter International Inc. provides a portfolio of healthcare products. The company operates through North and South America; Europe, Middle East and Africa; and Asia-Pacific segments. It offers peritoneal dialysis and hemodialysis, and additional dialysis therapies and services; renal replacement therapies and other organ support therapies focused in the intensive care unit; sterile intravenous (IV) solutions, IV therapies, infusion pumps, administration sets, and drug reconstitution devices; and parenteral nutrition therapies. The company also provides biological products and medical devices, and surgical hemostat and sealant products used in surgical procedures for hemostasis, tissue sealing, and adhesion prevention; premixed and oncology drug platforms, inhaled anesthesia and critical care products, and pharmacy compounding services; and generic injectable pharmaceuticals. Its products are used in hospitals, kidney dialysis centers, nursing homes, rehabilitation centers, doctors' offices, and by patients at home under physician supervision. The company sells its products through direct sales force, independent distributors, drug wholesalers, and specialty pharmacy or other alternate site providers in approximately 100 countries. It has an agreement with Celerity Pharmaceutical, LLC to develop acute care generic injectable premix and oncolytic molecules. Baxter International Inc. was founded in 1931 and is headquartered in Deerfield, Illinois.

Arch Therapeutics Company Profile

Arch Therapeutics, Inc., operates as a biotechnology company in the United States. The company develops products based on its technology to stop bleeding and control leaking, as well as provides other advantages during surgery, trauma, and interventional care. Its primary product candidate is AC5 Devices, a synthetic biocompatible peptides that comprises naturally occurring amino acids to achieve hemostasis in minimally invasive and open surgical procedures. The company was founded in 2006 and is based in Framingham, Massachusetts.

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