Financial Survey: Aceto Corporation (ACET) versus Tetraphase Pharmaceuticals (TTPH)

Aceto Corporation (NASDAQ: ACET) and Tetraphase Pharmaceuticals (NASDAQ:TTPH) are both small-cap medical companies, but which is the better investment? We will contrast the two companies based on the strength of their valuation, earnings, risk, profitability, analyst recommendations, institutional ownership and dividends.

Profitability

This table compares Aceto Corporation and Tetraphase Pharmaceuticals’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Aceto Corporation 1.78% 10.21% 4.20%
Tetraphase Pharmaceuticals -2,092.20% -79.79% -71.63%

Risk and Volatility

Aceto Corporation has a beta of 1.35, meaning that its share price is 35% more volatile than the S&P 500. Comparatively, Tetraphase Pharmaceuticals has a beta of 2.58, meaning that its share price is 158% more volatile than the S&P 500.

Institutional & Insider Ownership

80.9% of Aceto Corporation shares are held by institutional investors. Comparatively, 40.9% of Tetraphase Pharmaceuticals shares are held by institutional investors. 4.1% of Aceto Corporation shares are held by insiders. Comparatively, 5.5% of Tetraphase Pharmaceuticals shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company will outperform the market over the long term.

Analyst Ratings

This is a breakdown of recent ratings and target prices for Aceto Corporation and Tetraphase Pharmaceuticals, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Aceto Corporation 0 2 1 0 2.33
Tetraphase Pharmaceuticals 0 2 4 0 2.67

Aceto Corporation presently has a consensus price target of $18.00, suggesting a potential upside of 71.76%. Tetraphase Pharmaceuticals has a consensus price target of $14.00, suggesting a potential upside of 140.14%. Given Tetraphase Pharmaceuticals’ stronger consensus rating and higher probable upside, analysts clearly believe Tetraphase Pharmaceuticals is more favorable than Aceto Corporation.

Earnings & Valuation

This table compares Aceto Corporation and Tetraphase Pharmaceuticals’ top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Aceto Corporation $638.32 million 0.49 $68.18 million $0.35 29.94
Tetraphase Pharmaceuticals $5.01 million 59.41 -$104.99 million ($2.81) -2.07

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

Dividends

Aceto Corporation pays an annual dividend of $0.26 per share and has a dividend yield of 2.5%. Tetraphase Pharmaceuticals does not pay a dividend. Aceto Corporation pays out 74.3% of its earnings in the form of a dividend.

Summary

Aceto Corporation beats Tetraphase Pharmaceuticals on 8 of the 15 factors compared between the two stocks.

About Aceto Corporation

Aceto Corporation (Aceto) is engaged in the marketing, sales and distribution of finished dosage form generic pharmaceuticals, nutraceutical products, pharmaceutical active ingredients and intermediates, specialty performance chemicals inclusive of agricultural intermediates and agricultural protection products. The Company’s business is organized along product lines into three segments: Human Health, Pharmaceutical Ingredients and Performance Chemicals. As of June 30, 2016, it distributed over 1,100 chemical compounds used primarily as finished products or raw materials in the agricultural, coatings and industrial chemical industries. The Human Health segment includes finished dosage form generic drugs and nutraceutical products. As of June 30, 2016, the Pharmaceutical Ingredients segment had two product groups: Active Pharmaceutical Ingredients and Pharmaceutical Intermediates. The Performance Chemicals segment includes specialty chemicals and agricultural protection products.

About Tetraphase Pharmaceuticals

Tetraphase Pharmaceuticals, Inc. is a clinical-stage biopharmaceutical company. The Company uses its chemistry technology to create antibiotics for multidrug-resistant infections. The Company is developing its lead product candidate, eravacycline, a fully synthetic tetracycline derivative, as a spectrum intravenous (IV) and oral antibiotic for use as a first-line empiric monotherapy for the treatment of multidrug-resistant infections, including multidrug-resistant gram-negative infections. The Company also develops TP-6076 for multidrug-resistant gram-negative infections. Eravacycline is a fluorocycline antibiotic. The Company is conducting a global Phase III clinical program for eravacycline called Investigating Gram-Negative Infections Treated with Eravacycline (IGNITE). TP-271 is a fully synthetic fluorocycline being developed for respiratory disease caused by bacterial biothreat pathogens in healthy volunteers.

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