Aceto Corporation (NASDAQ: ACET) and Sanofi (NYSE:SNY) are both medical companies, but which is the better stock? We will compare the two businesses based on the strength of their risk, valuation, profitability, earnings, dividends, analyst recommendations and institutional ownership.

Analyst Recommendations

This is a breakdown of recent ratings and target prices for Aceto Corporation and Sanofi, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Aceto Corporation 0 2 1 0 2.33
Sanofi 1 7 4 0 2.25

Aceto Corporation presently has a consensus target price of $18.00, indicating a potential upside of 66.05%. Sanofi has a consensus target price of $53.50, indicating a potential upside of 9.99%. Given Aceto Corporation’s stronger consensus rating and higher possible upside, analysts plainly believe Aceto Corporation is more favorable than Sanofi.

Institutional & Insider Ownership

82.3% of Aceto Corporation shares are held by institutional investors. Comparatively, 9.3% of Sanofi shares are held by institutional investors. 4.1% of Aceto Corporation shares are held by company insiders. Comparatively, 1.0% of Sanofi shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.

Profitability

This table compares Aceto Corporation and Sanofi’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Aceto Corporation 1.78% 10.21% 4.20%
Sanofi 25.89% 25.34% 14.17%

Volatility & Risk

Aceto Corporation has a beta of 1.35, suggesting that its stock price is 35% more volatile than the S&P 500. Comparatively, Sanofi has a beta of 0.88, suggesting that its stock price is 12% less volatile than the S&P 500.

Earnings & Valuation

This table compares Aceto Corporation and Sanofi’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Aceto Corporation $638.32 million 0.51 $68.18 million $0.35 30.97
Sanofi $42.52 billion 2.87 $12.76 billion $3.92 12.41

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

Dividends

Aceto Corporation pays an annual dividend of $0.26 per share and has a dividend yield of 2.4%. Sanofi pays an annual dividend of $1.10 per share and has a dividend yield of 2.3%. Aceto Corporation pays out 74.3% of its earnings in the form of a dividend. Sanofi pays out 28.1% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years.

Summary

Sanofi beats Aceto Corporation on 9 of the 16 factors compared between the two stocks.

About Aceto Corporation

Aceto Corporation (Aceto) is engaged in the marketing, sales and distribution of finished dosage form generic pharmaceuticals, nutraceutical products, pharmaceutical active ingredients and intermediates, specialty performance chemicals inclusive of agricultural intermediates and agricultural protection products. The Company’s business is organized along product lines into three segments: Human Health, Pharmaceutical Ingredients and Performance Chemicals. As of June 30, 2016, it distributed over 1,100 chemical compounds used primarily as finished products or raw materials in the agricultural, coatings and industrial chemical industries. The Human Health segment includes finished dosage form generic drugs and nutraceutical products. As of June 30, 2016, the Pharmaceutical Ingredients segment had two product groups: Active Pharmaceutical Ingredients and Pharmaceutical Intermediates. The Performance Chemicals segment includes specialty chemicals and agricultural protection products.

About Sanofi

Sanofi is a healthcare company, focused on patient needs and engaged in the research, development, manufacture and marketing of therapeutic solutions. The Company’s segments are Pharmaceuticals, Human Vaccines (Vaccines), and Other. The Pharmaceuticals segment comprises the commercial operations of various franchises, including Speciality Care (Rare Diseases, Multiple Sclerosis, and Oncology), Diabetes and Cardiovascular, Established Prescription Products, Consumer Healthcare and Generics, and research and development, production and marketing activities for all of the Company’s pharmaceuticals operations. The Vaccines segment is dedicated to vaccines and includes the commercial operations of the Company’s vaccines division Sanofi Pasteur and dedicated research and development, production and marketing activities for the Company’s vaccines operations. Its Rare Diseases products include Cerezyme, Cerdelga, Myozyme and Lumizyme, Fabrazyme, and Aldurazyme.

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