Critical Contrast: Nephros (NASDAQ:NEPH) and Veru (NASDAQ:VERU)

Nephros (NASDAQ:NEPH) and Veru (NASDAQ:VERU) are both small-cap medical companies, but which is the superior business? We will contrast the two companies based on the strength of their dividends, valuation, profitability, institutional ownership, earnings, risk and analyst recommendations.

Risk and Volatility

Nephros has a beta of 1.4, meaning that its share price is 40% more volatile than the S&P 500. Comparatively, Veru has a beta of -1.42, meaning that its share price is 242% less volatile than the S&P 500.

Earnings and Valuation

This table compares Nephros and Veru”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Nephros	$14.16 million	3.08	$70,000.00	$0.13	31.54
Veru	$16.89 million	2.18	-$22.73 million	($1.70)	-1.35

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

Institutional & Insider Ownership

41.1% of Nephros shares are owned by institutional investors. Comparatively, 47.2% of Veru shares are owned by institutional investors. 6.7% of Nephros shares are owned by insiders. Comparatively, 14.2% of Veru shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company is poised for long-term growth.

Analyst Ratings

This is a summary of recent recommendations and price targets for Nephros and Veru, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Nephros	0	1	1	0	2.50
Veru	1	0	3	0	2.50

Nephros currently has a consensus target price of $6.00, suggesting a potential upside of 46.34%. Veru has a consensus target price of $22.50, suggesting a potential upside of 882.53%. Given Veru’s higher possible upside, analysts clearly believe Veru is more favorable than Nephros.

Profitability

This table compares Nephros and Veru’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Nephros	8.26%	15.81%	12.22%
Veru	N/A	-83.63%	-55.90%

Summary

Nephros beats Veru on 8 of the 13 factors compared between the two stocks.

About Nephros

Nephros, Inc., a commercial-stage company, develops and sells water solutions to the medical and commercial markets in the United States. It offers ultrafiltration products that are used in dialysis centers for the removal of biological contaminants from water and bicarbonate concentrate; and in hospitals for the prevention of infection from waterborne pathogens, such as legionella and pseudomonas, as well as in military and outdoor recreation, commercial, and other healthcare facilities. The company also manufactures and sells water filters that enhance the taste and odor of water, as well as reduce biofilm, cysts, particulates, and scale build-up in downstream equipment. It markets its products to food service, hospitality, convenience store, and health care markets, as well as medical institutions. The company was incorporated in 1997 and is headquartered in South Orange, New Jersey.

About Veru

Veru Inc., a late clinical stage biopharmaceutical company, focuses on developing medicines for treatment of metabolic diseases, oncology, and acute respiratory distress syndrome (ARDS). Its marketed products comprise FC2 female condom for the dual protection against unplanned pregnancy and the transmission of sexually transmitted infections. The company’s development program includes enobosarm, a selective androgen receptor modulator for treatment of augment fat loss and to prevent muscle loss in sarcopenic obese and overweight elderly patients; Enobosarm, a selective androgen receptor modulator for the treatment of AR+ ER+ HER2- metastatic breast cancer; and sabizabulin, a microtubule disruptor for the treatment of hospitalized patients with viral lung infection on oxygen support who are at high risk for viral induced ARDS and death. The company was formerly known as The Female Health Company and changed its name to Veru Inc. in July 2017. Veru Inc. was incorporated in 1971 and is headquartered in Miami, Florida.