Verenium Corp (NASDAQ: VRNM) and Enzymotec (NASDAQ:ENZY) are both small-cap basic materials companies, but which is the better business? We will contrast the two companies based on the strength of their profitability, dividends, analyst recommendations, institutional ownership, valuation, risk and earnings.

Profitability

This table compares Verenium Corp and Enzymotec’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Verenium Corp N/A N/A N/A
Enzymotec -12.32% -3.26% -2.99%

Risk and Volatility

Verenium Corp has a beta of 0.83, indicating that its stock price is 17% less volatile than the S&P 500. Comparatively, Enzymotec has a beta of 1.23, indicating that its stock price is 23% more volatile than the S&P 500.

Earnings & Valuation

This table compares Verenium Corp and Enzymotec’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio NetIncome Earnings Per Share Price/Earnings Ratio
Verenium Corp N/A N/A N/A ($1.56) -2.56
Enzymotec $47.70 million 5.80 -$2.92 million ($0.26) -45.38

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

Analyst Recommendations

This is a summary of recent recommendations for Verenium Corp and Enzymotec, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Verenium Corp 0 0 0 0 N/A
Enzymotec 0 2 0 0 2.00

Enzymotec has a consensus target price of $11.75, suggesting a potential downside of 0.42%. Given Enzymotec’s higher possible upside, analysts plainly believe Enzymotec is more favorable than Verenium Corp.

Institutional and Insider Ownership

26.6% of Enzymotec shares are owned by institutional investors. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Summary

Enzymotec beats Verenium Corp on 5 of the 8 factors compared between the two stocks.

About Verenium Corp

Verenium Corporation (Verenium) is an industrial biotechnology company. The Company develops and commercializes enzymes for use in a range of industrial processes. It manufactures and markets its enzyme products in the fields of animal health and nutrition, grain processing, oilfield services and other industrial processes, such as pulp and paper and textiles. As of December 31, 2012, it marketed commercial enzyme products, either independently or in collaboration with its partners. In addition, it has developed a pipeline of enzyme product candidates. Its products are organized into four product lines: animal health and nutrition, grain processing, oilfield services and other industrial processes. As of December 31, 2012, it markets nine commercial enzyme products. In October 2013, BASF SE acquired 71% stake in the Company.

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.

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