Spectral Diagnostics (OTCMKTS:EDTXF) vs. Masimo (NASDAQ:MASI) Critical Review

Spectral Diagnostics (OTCMKTS:EDTXF) and Masimo (NASDAQ:MASI) are both medical companies, but which is the superior business? We will contrast the two companies based on the strength of their risk, dividends, profitability, valuation, institutional ownership, earnings and analyst recommendations.

Analyst Recommendations

This is a breakdown of current recommendations and price targets for Spectral Diagnostics and Masimo, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Spectral Diagnostics	0	0	0	0	0.00
Masimo	1	8	0	0	1.89

Masimo has a consensus price target of $181.17, suggesting a potential upside of 2.29%. Given Masimo’s stronger consensus rating and higher possible upside, analysts plainly believe Masimo is more favorable than Spectral Diagnostics.

Profitability

This table compares Spectral Diagnostics and Masimo’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Spectral Diagnostics	-1,955.89%	N/A	-808.42%
Masimo	-9.92%	32.02%	13.73%

Volatility & Risk

Spectral Diagnostics has a beta of 0.04, indicating that its stock price is 96% less volatile than the S&P 500. Comparatively, Masimo has a beta of 1.21, indicating that its stock price is 21% more volatile than the S&P 500.

Insider & Institutional Ownership

86.0% of Masimo shares are owned by institutional investors. 1.5% of Spectral Diagnostics shares are owned by company insiders. Comparatively, 9.7% of Masimo shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Valuation & Earnings

This table compares Spectral Diagnostics and Masimo”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Spectral Diagnostics	$1.75 million	172.19	-$11.24 million	($0.12)	-8.58
Masimo	$1.53 billion	6.23	-$151.50 million	($10.54)	-16.80

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

Summary

Masimo beats Spectral Diagnostics on 9 of the 13 factors compared between the two stocks.

About Spectral Diagnostics

Spectral Medical Inc. focuses on the development and commercialization of products for the treatment of septic shock in the United States, Italy, Ireland, and internationally. The company markets Endotoxin Activity Assay, a rapid in vitro diagnostic test for the detection of components of gram negative bacterial cell wall; and Polymyxin B Hemoperfusion, a therapeutic hemoperfusion device that removes endotoxin from the bloodstream. It also develops and manufactures monoclonal and polyclonal antibodies, recombinant cardiac proteins, and calibrators for use in the research and development, as well as products that are manufactured by other diagnostic companies. The company was formerly known as Spectral Diagnostics Inc. and changed its name to Spectral Medical Inc. in December 2014. Spectral Medical Inc. was incorporated in 1991 and is headquartered in Toronto, Canada.

About Masimo

Masimo Corporation develops, manufactures, and markets various patient monitoring technologies, and automation and connectivity solutions worldwide. The company offers masimo signal extraction technology (SET) pulse oximetry with measure-through motion and low perfusion pulse oximetry monitoring to address the primary limitations of conventional pulse oximetry; Masimo rainbow SET platform, including rainbow SET Pulse CO-Oximetry products that allows noninvasive monitoring of carboxyhemoglobin, methemoglobin, hemoglobin concentration, fractional arterial oxygen saturation, oxygen content, pleth variability index, rainbow pleth variability index, respiration rate from the pleth, and oxygen reserve index, as well as acoustic respiration monitoring, SedLine brain function monitoring, NomoLine capnography and gas monitoring, and regional oximetry. It also provides brain function and hemodynamic monitoring solutions; patient position and activity tracking, and neuromodulation technology solutions; and Masimo Hospital Automation platform, including hospital automation solutions, including Patient SafetyNet, Patient SafetyNet Surveillance, SafetyNet, Replica, Iris, MyView, UniView, Uniview: 60, Masimo Sleep, Centroid, and Bridg; and nasal high-flow ventilation, neuromodulation therapeutics, and telehealth solutions. In addition, the company provides its products through direct sales force, distributors, and original equipment manufacturers partners to hospitals, emergency medical service and home care providers, long-term care facilities, physician offices, veterinarians, and consumers; and home wellness products through e-commerce internet sites, such as masimopersonalhealth.com, amazon.com, and shopify.com. Masimo Corporation was incorporated in 1989 and is headquartered in Irvine, California.