Neos Therapeutics (NASDAQ: NEOS) and Lannett Co (NYSE:LCI) are both small-cap medical companies, but which is the superior stock? We will compare the two businesses based on the strength of their analyst recommendations, earnings, valuation, dividends, institutional ownership, profitabiliy and risk.

Profitability

This table compares Neos Therapeutics and Lannett Co’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Neos Therapeutics -719.86% -512.10% -87.88%
Lannett Co -0.41% 22.13% 6.99%

Analyst Recommendations

This is a summary of recent ratings and price targets for Neos Therapeutics and Lannett Co, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Neos Therapeutics 0 0 2 0 3.00
Lannett Co 0 3 3 0 2.50

Neos Therapeutics presently has a consensus price target of $17.50, suggesting a potential upside of 121.52%. Lannett Co has a consensus price target of $28.60, suggesting a potential upside of 46.67%. Given Neos Therapeutics’ stronger consensus rating and higher possible upside, equities research analysts clearly believe Neos Therapeutics is more favorable than Lannett Co.

Volatility and Risk

Neos Therapeutics has a beta of -0.8, indicating that its share price is 180% less volatile than the S&P 500. Comparatively, Lannett Co has a beta of 2.66, indicating that its share price is 166% more volatile than the S&P 500.

Institutional and Insider Ownership

40.2% of Neos Therapeutics shares are held by institutional investors. Comparatively, 98.7% of Lannett Co shares are held by institutional investors. 4.9% of Neos Therapeutics shares are held by insiders. Comparatively, 15.0% of Lannett Co shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock is poised for long-term growth.

Earnings and Valuation

This table compares Neos Therapeutics and Lannett Co’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Neos Therapeutics $12.20 million 14.61 -$77.12 million ($5.27) -1.50
Lannett Co $667.11 million 1.09 $261.24 million ($0.08) -243.72

Lannett Co has higher revenue and earnings than Neos Therapeutics. Lannett Co is trading at a lower price-to-earnings ratio than Neos Therapeutics, indicating that it is currently the more affordable of the two stocks.

Summary

Lannett Co beats Neos Therapeutics on 10 of the 13 factors compared between the two stocks.

About Neos Therapeutics

Neos Therapeutics, Inc. is a pharmaceutical company. The Company is focused on developing, manufacturing and commercializing products utilizing its modified-release drug delivery technology platform. Its segment is engaged in the development, manufacturing and commercialization of pharmaceuticals. It has utilized its platform to develop its product for the treatment of attention deficit hyperactivity disorder (ADHD). Its product candidates are extended-release (XR), medications in patient-friendly, orally disintegrating tablets (ODT) or liquid suspension dosage forms. Its branded product and product candidates incorporate over two of the prescribed medications for the treatment of ADHD, methylphenidate and amphetamine. Its modified-release drug delivery platform has enabled it to create extended-release ODT and liquid suspension dosage forms of the medications. It focuses on developing Adzenys XR-ODT, Cotempla XR-ODT and NT-0201.

About Lannett Co

Lannett Company, Inc. develops, manufactures, markets and distributes generic versions of brand pharmaceutical products. The Company manufactures and/or distributes prescription products with the exception of a small portfolio of over-the-counter products manufactured by its subsidiary, Silarx Pharmaceuticals, Inc. As of June 30, 2016, the Company’s products included Acetazolamide Tablets; Butalbital, Acetaminophen and Caffeine Tablets; Butalbital, Aspirin and Caffeine Capsules; C-Topical Solution; Digoxin Tablets; Glycolax Rx; Isosorbide Mononitrate CR; Levothyroxine Sodium Tablets; Methylphenidate HCL CD; Methylphenidate ER; Nifedipine CR; Omeprazole DR; Oxbutynin ER; Pantoprazole DR; Pilocarpine HCl Tablets; Triamterene w/Hydrochlorothiazide Capsules, and Ursodiol Capsules. The Company has additional products under development, which are orally administered solid oral-dosage products (tablet/capsule) or oral solutions, nasal, topicals or parentarels, as well as other dosage forms.

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