Sonoma Pharmaceuticals (NASDAQ:SNOA) and Vanda Pharmaceuticals (NASDAQ:VNDA) Critical Survey

Vanda Pharmaceuticals (NASDAQ:VNDA) and Sonoma Pharmaceuticals (NASDAQ:SNOA) are both small-cap healthcare companies, but which is the better investment? We will contrast the two businesses based on the strength of their dividends, profitability, risk, earnings, analyst recommendations, institutional ownership and valuation.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Vanda Pharmaceuticals	-119.87%	-62.70%	-37.53%
Sonoma Pharmaceuticals	-10.33%	-21.41%	-6.08%

Valuation & Earnings

This table compares Vanda Pharmaceuticals and Sonoma Pharmaceuticals”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Vanda Pharmaceuticals	$216.10 million	1.15	-$220.47 million	($4.62)	-0.89
Sonoma Pharmaceuticals	$19.53 million	0.30	-$3.17 million	($1.22)	-1.00

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

Insider & Institutional Ownership

88.1% of Vanda Pharmaceuticals shares are owned by institutional investors. Comparatively, 1.9% of Sonoma Pharmaceuticals shares are owned by institutional investors. 10.7% of Vanda Pharmaceuticals shares are owned by company insiders. Comparatively, 1.0% of Sonoma Pharmaceuticals shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Analyst Ratings

This is a breakdown of current ratings and recommmendations for Vanda Pharmaceuticals and Sonoma Pharmaceuticals, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Vanda Pharmaceuticals	1	2	6	0	2.56
Sonoma Pharmaceuticals	1	0	0	0	1.00

Vanda Pharmaceuticals presently has a consensus target price of $13.50, indicating a potential upside of 227.27%. Given Vanda Pharmaceuticals’ stronger consensus rating and higher possible upside, analysts plainly believe Vanda Pharmaceuticals is more favorable than Sonoma Pharmaceuticals.

Risk & Volatility

Vanda Pharmaceuticals has a beta of 0.74, meaning that its share price is 26% less volatile than the S&P 500. Comparatively, Sonoma Pharmaceuticals has a beta of 1.31, meaning that its share price is 31% more volatile than the S&P 500.

Summary

Vanda Pharmaceuticals beats Sonoma Pharmaceuticals on 8 of the 14 factors compared between the two stocks.

About Vanda Pharmaceuticals

Vanda Pharmaceuticals Inc. is a biopharmaceutical company focused on developing and commercializing therapies for central nervous system disorders and other conditions with significant unmet medical needs. Founded in 2003 and headquartered in Washington, D.C., the company primarily serves patients and healthcare providers in the United States, with certain products and commercial rights extending to international markets. Vanda’s marketed products include Hetlioz (tasimelteon), a treatment for Non-24-Hour Sleep-Wake Disorder in totally blind individuals and nighttime sleep disturbances associated with Smith-Magenis syndrome.

About Sonoma Pharmaceuticals

Sonoma Pharmaceuticals, Inc. is a specialty pharmaceutical company focused on developing, manufacturing and commercializing non-antibiotic and non-steroidal products for human and animal health. Its products are designed for applications including dermatology, wound care, eye care and veterinary treatment. The company’s product portfolio is based primarily on Microcyn technology, a stabilized hypochlorous acid solution intended to cleanse, debride and manage wounds and various skin conditions. Products marketed under the company’s brands have included Dermacyn, for wound and skin care, and Ocucyn, for ophthalmic care, along with veterinary products and other prescription and over-the-counter formulations.