Sonoma Pharmaceuticals (NASDAQ: SNOA) and Transition Therapeutics (NASDAQ:TTHI) are both medical companies, but which is the superior business? We will contrast the two businesses based on the strength of their dividends, earnings, profitability, institutional ownership, analyst recommendations, valuation and risk.

Insider and Institutional Ownership

9.7% of Sonoma Pharmaceuticals shares are held by institutional investors. 13.3% of Sonoma Pharmaceuticals shares are held by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company will outperform the market over the long term.

Analyst Ratings

This is a breakdown of current recommendations and price targets for Sonoma Pharmaceuticals and Transition Therapeutics, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Sonoma Pharmaceuticals 0 0 1 0 3.00
Transition Therapeutics 0 0 0 0 N/A

Sonoma Pharmaceuticals presently has a consensus target price of $10.00, indicating a potential upside of 133.64%.

Profitability

This table compares Sonoma Pharmaceuticals and Transition Therapeutics’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Sonoma Pharmaceuticals 54.36% -44.24% -36.04%
Transition Therapeutics N/A -58.00% -47.29%

Valuation and Earnings

This table compares Sonoma Pharmaceuticals and Transition Therapeutics’ gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio NetIncome Earnings Per Share Price/Earnings Ratio
Sonoma Pharmaceuticals $12.82 million 1.44 $9.27 million $1.99 2.15
Transition Therapeutics N/A N/A N/A ($1.07) N/A

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

Summary

Sonoma Pharmaceuticals beats Transition Therapeutics on 8 of the 8 factors compared between the two stocks.

Sonoma Pharmaceuticals Company Profile

Sonoma Pharmaceuticals, Inc., formerly Oculus Innovative Sciences, Inc., is a specialty pharmaceutical company that develops and markets solutions for the treatment of dermatological conditions and advanced tissue care. The Company’s product portfolio consists of dermatology and advanced tissue care products based upon its technologies, such as Microcyn and Lipogrid. Microcyn is a small-molecule oxychlorine compound with antimicrobial and anti-inflammatory properties that, in clinical settings, reduces itch and pain associated with dermal irritations and wounds, such as sores, injuries and ulcers of dermal tissue. Lipogrid Technology contains selected lipids and a lipid precursor designed to penetrate the bilayers of the skin by blending with the natural lipid building blocks. Its products serve over five million patients across the globe by reducing infections, itch, pain, scarring and inflammatory responses. Its products are sold throughout the United States and internationally.

Transition Therapeutics Company Profile

Transition Therapeutics Inc. is a product-focused biopharmaceutical company. The Company’s principal business activity is the researching and developing of therapeutic agents. The Company is developing therapeutics for central nervous system (CNS) and metabolic disease indications. The Company’s technologies are focused on the treatment of agitation and aggression in Alzheimer’s disease and diabetes. The Company’s subsidiary, Transition Therapeutics Ireland Limited (Transition Ireland), is developing two drug candidates: neuropsychiatric candidate ELND005 and androgen deficiency candidate TT701. The Company’s subsidiary, Waratah Pharmaceuticals Inc. (Waratah), is developing diabetes drug candidate TT401. The Company’s other two entities provide development services in support of the clinical and non-clinical activities of Transition Ireland and Waratah.

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