Head to Head Review: Puma Biotechnology (NASDAQ:PBYI) versus Ironwood Pharmaceuticals (NASDAQ:IRWD)

Puma Biotechnology (NASDAQ:PBYI) and Ironwood Pharmaceuticals (NASDAQ:IRWD) are both small-cap healthcare companies, but which is the superior investment? We will contrast the two businesses based on the strength of their earnings, risk, analyst recommendations, valuation, institutional ownership, dividends and profitability.

Profitability

This table compares Puma Biotechnology and Ironwood Pharmaceuticals’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Puma Biotechnology	11.50%	20.76%	13.22%
Ironwood Pharmaceuticals	33.36%	-58.38%	34.93%

Insider & Institutional Ownership

61.3% of Puma Biotechnology shares are held by institutional investors. 22.2% of Puma Biotechnology shares are held by insiders. Comparatively, 9.3% of Ironwood Pharmaceuticals shares are held by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock will outperform the market over the long term.

Valuation & Earnings

This table compares Puma Biotechnology and Ironwood Pharmaceuticals”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Puma Biotechnology	$231.24 million	2.42	$31.11 million	$0.52	20.87
Ironwood Pharmaceuticals	$296.15 million	1.95	$24.02 million	$0.77	4.55

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

Analyst Ratings

This is a breakdown of recent recommendations for Puma Biotechnology and Ironwood Pharmaceuticals, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Puma Biotechnology	0	1	1	0	2.50
Ironwood Pharmaceuticals	0	4	2	1	2.57

Puma Biotechnology presently has a consensus price target of $6.00, suggesting a potential downside of 44.70%. Ironwood Pharmaceuticals has a consensus price target of $6.23, suggesting a potential upside of 78.10%. Given Ironwood Pharmaceuticals’ stronger consensus rating and higher possible upside, analysts plainly believe Ironwood Pharmaceuticals is more favorable than Puma Biotechnology.

Risk and Volatility

Puma Biotechnology has a beta of 1.22, indicating that its stock price is 22% more volatile than the S&P 500. Comparatively, Ironwood Pharmaceuticals has a beta of 0.21, indicating that its stock price is 79% less volatile than the S&P 500.

Summary

Ironwood Pharmaceuticals beats Puma Biotechnology on 8 of the 15 factors compared between the two stocks.

About Puma Biotechnology

Puma Biotechnology, Inc., a biopharmaceutical company, focuses on the development and commercialization of products to enhance cancer care in the United States and internationally. The company offers NERLYNX, an oral version of neratinib that is used to treat adult patients with early stage HER2-overexpressed/amplified breast cancer; and advanced or metastatic HER2-positive breast cancer when combined with capecitabine. It also develops alisertib, a small molecule inhibitor of aurora kinase A for the treatment of hormone receptor positive breast cancer, triple negative breast cancer, small cell lung cancer, and head and neck cancer. The company sells its products through specialty pharmacy and distributor networks. It has license agreements with Pfizer Inc. for the development, manufacture, and commercialization of neratinib (oral), neratinib (intravenous), PB357, and related compounds; and Takeda Pharmaceutical Company Limited for the research, development, and commercialization of alisertib, as well as sub-license agreements with Specialised Therapeutics Asia Pte Ltd., Medison Pharma Ltd., Pint Pharma International SA, Knight Therapeutics, Inc., Pierre Fabre Medicament SAS, and Bixink Therapeutics Co., Ltd. The company was founded in 2010 and is headquartered in Los Angeles, California.

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.