Critical Survey: Applied Therapeutics (NASDAQ:APLT) versus Ironwood Pharmaceuticals (NASDAQ:IRWD)

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

Insider and Institutional Ownership

98.3% of Applied Therapeutics shares are held by institutional investors. 12.9% of Ironwood Pharmaceuticals shares are held by company insiders. Comparatively, 8.6% of Applied Therapeutics shares are held by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Volatility and Risk

Ironwood Pharmaceuticals has a beta of 0.48, suggesting that its stock price is 52% less volatile than the S&P 500. Comparatively, Applied Therapeutics has a beta of 2.04, suggesting that its stock price is 104% more volatile than the S&P 500.

Analyst Recommendations

This is a summary of current ratings and target prices for Ironwood Pharmaceuticals and Applied Therapeutics, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Ironwood Pharmaceuticals	0	3	4	0	2.57
Applied Therapeutics	0	0	5	1	3.17

Ironwood Pharmaceuticals presently has a consensus target price of $12.17, indicating a potential upside of 186.27%. Applied Therapeutics has a consensus target price of $12.50, indicating a potential upside of 42.86%. Given Ironwood Pharmaceuticals’ higher probable upside, research analysts clearly believe Ironwood Pharmaceuticals is more favorable than Applied Therapeutics.

Profitability

This table compares Ironwood Pharmaceuticals and Applied Therapeutics’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Ironwood Pharmaceuticals	2.30%	-6.37%	4.61%
Applied Therapeutics	N/A	-350.45%	-103.09%

Valuation & Earnings

This table compares Ironwood Pharmaceuticals and Applied Therapeutics”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Ironwood Pharmaceuticals	$400.57 million	1.66	-$1.00 billion	($6.79)	-0.63
Applied Therapeutics	-$333,000.00	-3,002.51	-$119.76 million	($1.84)	-4.76

Applied Therapeutics has lower revenue, but higher earnings than Ironwood Pharmaceuticals. Applied Therapeutics is trading at a lower price-to-earnings ratio than Ironwood Pharmaceuticals, indicating that it is currently the more affordable of the two stocks.

Summary

Ironwood Pharmaceuticals beats Applied Therapeutics on 8 of the 15 factors compared between the two stocks.

About Ironwood Pharmaceuticals

Ironwood Pharmaceuticals, Inc., a healthcare company, focuses on the development and commercialization of gastrointestinal (GI) products. It markets linaclotide, a guanylate cyclase type-C (GC-C) agonist for the treatment of adults suffering from irritable bowel syndrome with constipation or chronic idiopathic constipation under the LINZESS name in the United States, Mexico, Japan, Saudi Arabia, and China, as well as under the CONSTELLA name in the Canada and European countries. The company is also developing IW-3300, a GC-C agonist for the treatment of visceral pain conditions, including interstitial cystitis/bladder pain syndrome and endometriosis; Apraglutide, a next-generation, long-acting synthetic peptide analog of glucagon-like peptide-2, as a differentiated therapeutic for rare diseases, including short bowel syndrome dependent on parenteral support and acute graft versus host disease; and CNP-104, an immune nanoparticle for the treatment of primary biliary cholangitis. The company has strategic partnerships with AbbVie Inc., AstraZeneca AB, and Astellas Pharma Inc. for the development and commercialization of linaclotide. The company was formerly known as Microbia, Inc. and changed its name to Ironwood Pharmaceuticals, Inc. in April 2008. Ironwood Pharmaceuticals, Inc. was incorporated in 1998 and is headquartered in Boston, Massachusetts.

About Applied Therapeutics

Applied Therapeutics, Inc., a clinical-stage biopharmaceutical company, engages in the development of a pipeline of novel product candidates against validated molecular targets in indications of high unmet medical need in the United States. The company's lead product candidate is AT-007 (also called govorestat) that has completed phase 3 for the treatment of galactosemia in healthy volunteers and adults, in pediatric clinical study for the treatment of galactosemia in kids, for treating enzyme sorbitol dehydrogenase, and for the treatment of phosphomannomutase enzyme-CDG. It also develops AT-001 (also called caficrestat) that is in phase 3 clinical trials to treat diabetic cardiomyopathy, as well as for the treatment of diabetic peripheral neuropathy; and AT-003, which is in preclinical studies for the treatment diabetic retinopathy. The company has exclusive license and supply agreement with Mercury Pharma Group Limited to commercialize drug products containing AT-007. Applied Therapeutics, Inc. was incorporated in 2016 and is headquartered in New York, New York.