ArthroCare (NASDAQ: ARTC) and Accuray (NASDAQ:ARAY) are both healthcare companies, but which is the better business? We will contrast the two businesses based on the strength of their valuation, dividends, analyst recommendations, risk, institutional ownership, profitability and earnings.

Profitability

This table compares ArthroCare and Accuray’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
ArthroCare N/A N/A N/A
Accuray -7.49% -55.18% -6.33%

Institutional and Insider Ownership

78.9% of Accuray shares are held by institutional investors. 3.9% of Accuray shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Valuation & Earnings

This table compares ArthroCare and Accuray’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
ArthroCare N/A N/A N/A $0.40 N/A
Accuray $383.41 million 0.93 -$29.57 million ($0.34) -12.50

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

Analyst Recommendations

This is a breakdown of recent ratings for ArthroCare and Accuray, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
ArthroCare 0 0 0 0 N/A
Accuray 1 2 4 0 2.43

Accuray has a consensus target price of $7.17, indicating a potential upside of 68.63%.

ArthroCare Company Profile

ArthroCare Corporation (ArthroCare) is a medical device company. ArthroCare develops and manufactures surgical devices, instruments, and implants. Its devices enable surgical procedures and enable new minimally invasive procedures. Many of ArthroCare’s devices use its Coblation technology. This technology dissolves target tissue and limits damage to surrounding healthy tissue. ArthroCare also develops surgical devices utilizing other patented technology, including its OPUS line of fixation products, as well as re-usable surgical instruments. ArthroCare’s two core product consists of sports medicine and ear, nose, and throat (ENT), as well as other areas, such as spine, wound care, urology and gynecology. It’s Sports Medicine, ENT and other products are marketed and sold through two principal geographic distribution channels: Americas (North and South America) and International (all other geographies). In May 2014, Smith & Nephew PLC acquired the Company.

Accuray Company Profile

Accuray Incorporated is a radiation oncology company. The Company develops, manufactures and markets medical devices used in radiation therapy for the treatment of cancer patients. Its products include the CyberKnife Systems, the TomoTherapy Systems, and the Radixact Delivery Treatment Platform. Its technologies, the CyberKnife and TomoTherapy Systems, are designed to deliver treatments, including stereotactic radiosurgery (SRS), stereotactic body radiation therapy (SBRT), intensity modulated radiation therapy (IMRT), image guided radiation therapy (IGRT) and adaptive radiation therapy. The CyberKnife Systems are robotic systems that are used to treat various types of cancer and tumors throughout the body. The CyberKnife Systems track, detect and correct for tumor and patient movement in real-time during the procedure. The TomoTherapy Systems include the TomoTherapy H Series with configuration options of TomoH, TomoHD and TomoHDA.

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