SeaSpine (NASDAQ: SPNE) and SurModics (NASDAQ:SRDX) are both small-cap medical companies, but which is the better investment? We will contrast the two companies based on the strength of their dividends, institutional ownership, earnings, valuation, profitability, analyst recommendations and risk.

Analyst Recommendations

This is a breakdown of current ratings and recommmendations for SeaSpine and SurModics, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
SeaSpine 0 0 4 0 3.00
SurModics 0 0 2 0 3.00

SeaSpine presently has a consensus target price of $19.00, suggesting a potential upside of 75.12%. SurModics has a consensus target price of $40.00, suggesting a potential upside of 34.23%. Given SeaSpine’s higher possible upside, equities analysts plainly believe SeaSpine is more favorable than SurModics.

Insider & Institutional Ownership

43.3% of SeaSpine shares are owned by institutional investors. Comparatively, 85.0% of SurModics shares are owned by institutional investors. 14.6% of SeaSpine shares are owned by insiders. Comparatively, 7.7% of SurModics shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Profitability

This table compares SeaSpine and SurModics’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
SeaSpine -26.37% -31.68% -24.15%
SurModics 5.37% 6.18% 5.11%

Valuation and Earnings

This table compares SeaSpine and SurModics’ top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
SeaSpine $128.86 million 1.13 -$43.21 million ($2.92) -3.72
SurModics $73.11 million 5.38 $3.92 million $0.29 102.76

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

Risk and Volatility

SeaSpine has a beta of 0.25, suggesting that its stock price is 75% less volatile than the S&P 500. Comparatively, SurModics has a beta of 0.81, suggesting that its stock price is 19% less volatile than the S&P 500.

Summary

SurModics beats SeaSpine on 9 of the 13 factors compared between the two stocks.

SeaSpine Company Profile

SeaSpine Holdings Corporation is a medical technology company. The Company is focused on the design, development and commercialization of surgical solutions for the treatment of patients suffering from spinal disorders. The Company operates through the development, manufacture and marketing of orthobiologics and spinal fusion hardware segment. It has a portfolio of orthobiologics and spinal fusion hardware solutions to meet the varying combinations of products that neurosurgeons and orthopedic spine surgeons need to perform fusion procedures in the lumbar, thoracic and cervical spine. It offers a portfolio of orthobiologics and spinal fusion hardware products for the treatment of patients suffering from spinal and other orthopedic disorders. Its orthobiologics products consist of a range of bone graft substitutes that are designed to improve bone fusion rates following a range of orthopedic surgeries, including spine, hip and extremities procedures.

SurModics Company Profile

Surmodics, Inc. is a provider of medical device and in vitro diagnostic technologies to the healthcare industry. The Company operates through two segments: Medical Device and In Vitro Diagnostics. The Company’s Medical Device segment consists of surface modification coating technologies to improve access, deliverability and predictable deployment of medical devices; international cardiology and peripheral balloon design, development and manufacturing, as well as drug delivery coating technologies to provide site-specific drug delivery from the surface of a medical device. The Company’s In Vitro Diagnostics segment manufactures or sells components for in vitro diagnostic immunoassay and molecular tests. The In Vitro Diagnostics segment manufactures and sells surface coatings to the diagnostic, biomedical research and life science markets. In Vitro Diagnostics segment offers protein stabilization reagents, substrates, antigens and surface coatings.

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