Accuray (NASDAQ:ARAY) and Hill-Rom (NYSE:HRC) are both medical companies, but which is the better stock? We will compare the two businesses based on the strength of their earnings, valuation, profitability, analyst recommendations, institutional ownership, risk and dividends.

Dividends

Hill-Rom pays an annual dividend of $0.80 per share and has a dividend yield of 0.9%. Accuray does not pay a dividend. Hill-Rom pays out 20.7% of its earnings in the form of a dividend. Hill-Rom has raised its dividend for 7 consecutive years.

Earnings and Valuation

This table compares Accuray and Hill-Rom’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Accuray $404.90 million 0.85 -$23.89 million ($0.28) -14.29
Hill-Rom $2.74 billion 2.23 $133.60 million $3.86 23.82

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

Analyst Ratings

This is a breakdown of recent recommendations for Accuray and Hill-Rom, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Accuray 2 2 3 0 2.14
Hill-Rom 0 3 6 0 2.67

Accuray presently has a consensus price target of $6.75, indicating a potential upside of 68.75%. Hill-Rom has a consensus price target of $100.29, indicating a potential upside of 9.08%. Given Accuray’s higher possible upside, equities research analysts plainly believe Accuray is more favorable than Hill-Rom.

Profitability

This table compares Accuray and Hill-Rom’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Accuray -5.90% -43.31% -5.26%
Hill-Rom 8.19% 20.54% 6.69%

Risk and Volatility

Accuray has a beta of 1.76, meaning that its stock price is 76% more volatile than the S&P 500. Comparatively, Hill-Rom has a beta of 0.89, meaning that its stock price is 11% less volatile than the S&P 500.

Institutional & Insider Ownership

83.5% of Accuray shares are owned by institutional investors. Comparatively, 84.8% of Hill-Rom shares are owned by institutional investors. 3.9% of Accuray shares are owned by company insiders. Comparatively, 1.9% of Hill-Rom shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock is poised for long-term growth.

Summary

Hill-Rom beats Accuray on 12 of the 16 factors compared between the two stocks.

About Accuray

Accuray Incorporated designs, develops, and sells radiosurgery and radiation therapy systems for the treatment of tumors in the body. The company offers the CyberKnife System, a robotic stereotactic radiosurgery and stereotactic body radiation therapy system used for the treatment of various types of cancer and tumors in the body. The CyberKnife System automatically tracks, detects, and corrects for tumor and patient movement in real-time during the procedure, as well as enables the delivery of precise, high dose radiation while patients breathe normally. It also offers the TomoTherapy System, which consists of an integrated and versatile radiation therapy system used for the treatment of a range of cancer types. The company markets its products in the United States directly, as well as through a sales agent and group purchasing organizations; and directly and through distributors and sales agents in Europe, Japan and other countries of Asia, South America, and internationally to hospitals and stand-alone treatment facilities. Accuray Incorporated was incorporated in 1990 and is headquartered in Sunnyvale, California.

About Hill-Rom

Hill-Rom Holdings, Inc. operates as a medical technology company worldwide. It provides medical surgical beds, intensive care unit beds, bariatric patient beds, lifts and other devices, non-invasive therapeutic products and surfaces, and communications technologies and software solutions; and medical equipment management services, as well as sells equipment service contracts for its capital equipment. The company also offers patient monitoring and diagnostics products, such as blood pressure, physical assessment, vital signs monitoring, diagnostic cardiopulmonary, diabetic retinopathy screening, and thermometry products; and respiratory health products, including Vest, VitalCough, MetaNeb, and Monarch systems to assist patients in the mobilization of retained blockages. In addition, it provides surgical solutions products comprising surgical tables, lights, and pendants; positioning devices for use in shoulder, hip, spinal, and lithotomy surgeries; platform-neutral positioning accessories; and operating room surgical safety and accessory products, such as scalpels and blades, light handle systems, skin markers, and other disposable products. The company sells and rents its products to acute and extended care facilities through direct sales force and distributors; and directly to patients in the home, as well as sells its products to primary care facilities through distributors. Further, it offers diagnostic cardiology devices, to serve the continuum of clinical care, from acute care to primary care, and clinical research organizations. Hill-Rom Holdings, Inc. was founded in 1969 and is headquartered in Chicago, Illinois.

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