Reviewing Mallinckrodt (OTCMKTS:MNKKQ) and Galapagos (NASDAQ:GLPG)

Galapagos (NASDAQ:GLPG) and Mallinckrodt (OTCMKTS:MNKKQ) are both small-cap medical companies, but which is the better investment? We will compare the two companies based on the strength of their earnings, valuation, institutional ownership, risk, profitability, analyst recommendations and dividends.

Profitability

This table compares Galapagos and Mallinckrodt’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Galapagos	N/A	N/A	N/A
Mallinckrodt	-56.33%	-59.80%	-16.98%

Analyst Recommendations

This is a summary of current ratings and price targets for Galapagos and Mallinckrodt, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Galapagos	4	5	0	0	1.56
Mallinckrodt	0	0	0	0	0.00

Galapagos presently has a consensus price target of $30.75, indicating a potential upside of 29.53%. Given Galapagos’ stronger consensus rating and higher possible upside, research analysts clearly believe Galapagos is more favorable than Mallinckrodt.

Valuation and Earnings

This table compares Galapagos and Mallinckrodt”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Galapagos	$259.40 million	6.03	$229.12 million	N/A	N/A
Mallinckrodt	$1.91 billion	0.00	-$911.20 million	N/A	N/A

Galapagos has higher earnings, but lower revenue than Mallinckrodt.

Institutional & Insider Ownership

32.5% of Galapagos shares are owned by institutional investors. 2.9% of Galapagos shares are owned by company insiders. Comparatively, 3.6% of Mallinckrodt shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock will outperform the market over the long term.

Summary

Galapagos beats Mallinckrodt on 8 of the 10 factors compared between the two stocks.

About Galapagos

Galapagos NV, a biotechnology company, develops medicines focusing on oncology and immunology primarily in the United States and Europe. The company's pipeline products comprise GLPG3667 that has completed phase 1b trial; GLPG5101, a CD19 CAR-T product candidate manufactured at point-of-care, currently in Phase1/2 trial in relapsed/refractory non-hodgkin lymphoma; GLPG5201, a CD19 CAR-T product candidates manufactured at point-of-care, currently in phase 1/2 trial in replapsed/refractory chronic lymphocytic leukemia; and GLPG5301, a BCMA CAR-T product candidate manufactured at point-of-care, currently in phase 1/2 in relapsed/refractory multiple myeloma. The company has collaboration agreements with Gilead Sciences, Inc.; and AbbVie S.à r.l. Galapagos NV was incorporated in 1999 and is headquartered in Mechelen, Belgium.

About Mallinckrodt

Mallinckrodt plc develops, manufactures, markets, and distributes specialty pharmaceutical products and therapies in the United States, Europe, the Middle East, Africa, and internationally. It operates in two segments, Specialty Brands and Specialty Generics. The company markets branded pharmaceutical products for autoimmune and rare diseases in the areas of neurology, rheumatology, nephrology, ophthalmology, pulmonology, and oncology; immunotherapy and neonatal respiratory critical care therapies; analgesics; cultured skin substitutes; and gastrointestinal products. It offers Acthar Gel, a repository corticotropin injection for rheumatoid arthritis, infantile spasms, systemic lupus erythematosus, multiple sclerosis, systemic dermatomyositis, symptomatic sarcoidosis, severe acute and chronic allergic, and inflammatory diseases; INOmax, a vasodilator to enhance oxygenation and reduce the need for extracorporeal membrane oxygenation; Therakos photopheresis, an immunotherapy treatment platform; Amitiza for constipation; and StrataGraft for the treatment of adults with deep partial-thickness burns. The company is also developing Terlipressin for the treatment of hepatorenal syndrome; and SLN 501 is a ribonucleic acid silencing therap. In addition, it provides specialty generic drugs and active pharmaceutical ingredients. The company markets its branded products to physicians, respiratory therapists, pharmacists, pharmacy buyers, hospital procurement departments, ambulatory surgical centers, and specialty pharmacies. Mallinckrodt plc has collaboration with Silence Therapeutics plc to develop and commercialize ribonucleic acid interference drug targets. The company was founded in 1867 and is based in Dublin, Ireland. On October 12, 2020, Mallinckrodt plc, along with its affiliates, filed a voluntary petition for reorganization under Chapter 11 in the U.S. Bankruptcy Court for the District of Delaware.