Enzymotec (NASDAQ: ENZY) and Innophos Holdings (NASDAQ:IPHS) are both small-cap medical companies, but which is the superior business? We will compare the two businesses based on the strength of their institutional ownership, earnings, risk, profitability, analyst recommendations, dividends and valuation.

Risk and Volatility

Enzymotec has a beta of 1.24, suggesting that its share price is 24% more volatile than the S&P 500. Comparatively, Innophos Holdings has a beta of 0.87, suggesting that its share price is 13% less volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of recent ratings and target prices for Enzymotec and Innophos Holdings, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Enzymotec 0 2 0 0 2.00
Innophos Holdings 0 0 1 0 3.00

Enzymotec currently has a consensus price target of $8.00, suggesting a potential downside of 31.62%. Innophos Holdings has a consensus price target of $56.00, suggesting a potential upside of 20.66%. Given Innophos Holdings’ stronger consensus rating and higher possible upside, analysts plainly believe Innophos Holdings is more favorable than Enzymotec.

Dividends

Innophos Holdings pays an annual dividend of $1.92 per share and has a dividend yield of 4.1%. Enzymotec does not pay a dividend. Innophos Holdings pays out 84.2% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Valuation & Earnings

This table compares Enzymotec and Innophos Holdings’ top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Enzymotec $47.01 million 5.71 -$4.56 million ($0.29) -40.34
Innophos Holdings $698.91 million 1.30 $116.47 million $2.28 20.36

Innophos Holdings has higher revenue and earnings than Enzymotec. Enzymotec is trading at a lower price-to-earnings ratio than Innophos Holdings, indicating that it is currently the more affordable of the two stocks.

Insider and Institutional Ownership

27.9% of Enzymotec shares are owned by institutional investors. Comparatively, 94.2% of Innophos Holdings shares are owned by institutional investors. 2.3% of Innophos Holdings shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.

Profitability

This table compares Enzymotec and Innophos Holdings’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Enzymotec -14.52% -3.88% -3.58%
Innophos Holdings 6.46% 13.79% 7.51%

Summary

Innophos Holdings beats Enzymotec on 12 of the 15 factors compared between the two stocks.

About Enzymotec

Enzymotec Ltd. is a nutritional ingredients and medical foods company. The Company’s technologies, research expertise and clinical validation process enables it to develop solutions across a range of products. The Company operates in two segments: Nutrition segment and VAYA Pharma segment. Both of the Company’s segments offer a range of products that leverage its lipid-related offerings. Its product suite addresses the entire human life-cycle, from infancy to old age, and comprises ingredients in products ranging from infant formula to nutritional supplements, as well as branded medical foods, sold only under a doctor’s supervision. It markets its product portfolio to established global consumer companies and physicians and target large and growing consumer health and wellness markets. The Company’s clinically-validated products include bio-functional lipid-based compounds designed to address dietary needs, medical disorders and common diseases.

About Innophos Holdings

Innophos Holdings, Inc. is a producer of nutritional specialty ingredients with applications in food, beverage, dietary supplements, pharmaceutical, oral care and industrial end markets. The Company also provides bioactive mineral and nutritional ingredients. The Company’s segments include Specialty Phosphates US & Canada, Specialty Phosphates Mexico, and Granular Triple Super Phosphate (GTSP) & Other. The Company has four principal product lines: Specialty Ingredients; Food and Technical Grade Purified Phosphoric Acid (PPA); Technical Grade Sodium Tripolyphosphate (STPP), & Detergent Grade PPA, and GTSP & Other. The Company’s bioactive mineral ingredients are mineral-based ingredients for food, beverage and dietary supplement end markets that are manufactured to be readily digestible. The Company has its manufacturing facilities located throughout the United States, Canada, Mexico and China.

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