Phibro Animal Health Corporation (PAHC) in Teaneck, N.J., and Jaguar Health, Inc. (JAGX) in San Francisco, are two budding players in the animal healthcare industry. PAHC offers antibacterials, anticoccidials, anthelmintics, vaccines, and mineral nutritional products for the treatment of food animals, including poultry, swine, beef and dairy cattle, and aquaculture. In comparison, JAGX operates as a natural-products pharmaceutical company that is engaged in the development and commercialization of gastrointestinal prescription products for humans and n animals worldwide.
A surge in pet adoption and expenditures on their food and medications drove the U.S. pet industry to $103.6 billion in net sales in 2020. This rising demand for advanced vaccines and drugs to prevent the spread of air and food-borne diseases in animals has incentivized companies to upgrade their product portfolios and gain expanded market reach. The global animal health market is expected to grow at 9% CAGR to reach $88.67 billion by 2028. So, both PAHC and JAGX should benefit from the industry tailwinds.
But, while JAGX has lost 13% in price over the past month, PAHC has advanced in price marginally. And in terms of their past six months’ performance, PAHC is a clear winner with 7.8% gains versus JAGX’s negative returns. But, which of these stocks is a better pick now? Let’s find out.
Recent Financial Results
PAHC’s revenues for its fiscal third quarter, ended March 31, 2021, increased marginally from the prior-year period to $211.70 million. The company’s gross profit came in at $70.60 million, representing a marginal decline from the year-ago period. Its adjusted pre-tax income declined 7.6% year-over-year to $19.40 million. PAHC’s net income came in at $13.90 million for the quarter, down 10.3% from the prior-year period. Its adjusted EPS is reported at $0.34, representing a 10.5% year-over-year decline. The company had $49.10 million in cash and cash equivalents as of March 31, 2021.
For the second quarter, ended June 30, 2021, JAGX’s product revenues decreased 722.6% year-over-year to $385,000. The company’s loss from operations increased 37% year-over-year to $11.58 million. JAGX’s net loss has been reported at $14.08 million, up 52.4% from the prior-year period. Its loss per share decreased 77.3% year-over-year to $0.10. JAGX had $21.99 million in total cash as of June 30, 2021.
Past and Expected Financial Performance
PAHC’s total assets have grown at a 6.3% CAGR over the past three years. Analysts expect its revenue to increase 3.3% year-over-year in the current quarter, ending September 30, 2021, 3.4% in the current year, and 3.1% next year. Its EPS is expected to increase 16.1% in its current quarter, 16.9% in the current year, and 6.9% next year. The stock’s EPS is expected to grow at a 7.3% rate per annum over the next five years.
In comparison, JAGX’s total assets have grown at a 11% CAGR over the past three years. Analysts expect JAGX’s revenue to increase 17.9% year-over-year in the current quarter, ending September 30, 2021, 43.9% in the current year, and 76.3% next year. Its EPS is expected to remain flat in the coming quarter of this year and next year. However, analysts expect the stock’s EPS to grow at a 40% rate per annum over the next five years.
PAHC’s trailing-12-month revenue is 81.9 times than JAGX’s. PAHC is also more profitable, with a 12.8% EBITDA margin versus JAGX’s negative returns.
PAHC’s ROE, ROA and ROTC values of 20.9%, 5.6%, and 7.2%, respectively, compare favorably with JAGX’s respective negative values.
In terms of non-GAAP forward P/E, PAHC is currently trading at 19.88x, versus JAGX’s negative 4.07x.
And in terms of forward EV/Sales, JAGX’s 11.93x is 636.4% higher than PAHC’s 1.62x.
While JAGX has an overall D grade, which translates to Sell in our proprietary POWR Ratings system, PAHC has an overall B grade, equating to Buy. The POWR Ratings are calculated by considering 118 distinct factors, each weighted to an optimal degree.
In terms of Momentum, PAHC has been graded a C, which is consistent with its mixed price performance over the past year. PAHC has delivered marginal price returns over the past month. In comparison, JAGX’s D grade for Momentum is in sync with its negative returns over the past month.
PAHC has an A grade for Value, which is consistent with its slightly lower-than-industry valuation ratios. PAHC’s 1.23x forward Price/Sales is 84.1% lower than the 7.72x industry average. However, JAGX’s C grade for Value is in sync with its slightly higher valuations compared to its peers. The company has an 11.60x forward Price/Sales, which is 50.1% higher than the 7.72x industry average.
Of the 81 stocks in the Medical – Services industry, PAHC is ranked #13. In comparison, JAGX is ranked #268 of 506 stocks in the Biotech industry.
Beyond what we’ve stated above, our POWR Ratings system has also rated both JAGX and PAHC for Growth, Sentiment, Stability, and Quality. Get all JAGX ratings here. Also, click here to see the additional POWR Ratings for PAHC.
Both PAHC and JAGX are well-positioned to benefit from the growing demand for viable vaccines and drugs for treating animal diseases. However, its relatively lower valuation and better profitability we think make PAHC a better buy here.
Our research shows that the odds of success increase if one bets on stocks with an Overall POWR Rating of Buy or Strong Buy. Click here to access the top-rated stocks in the Medical – Services industry, and here for those in the Biotech industry.
PAHC shares were trading at $25.31 per share on Wednesday afternoon, up $0.21 (+0.84%). Year-to-date, PAHC has gained 31.58%, versus a 19.23% rise in the benchmark S&P 500 index during the same period.
About the Author: Sweta Vijayan
Sweta is an investment analyst and journalist with a special interest in finding market inefficiencies. She’s passionate about educating investors, so that they may find success in the stock market. More…
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