T2 Biosystems (NASDAQ: TTOO) and STAAR Surgical (NASDAQ:STAA) are both small-cap healthcare companies, but which is the superior investment? We will compare the two companies based on the strength of their earnings, dividends, valuation, analyst recommendations, institutional ownership, risk and profitability.

Analyst Recommendations

This is a breakdown of current recommendations for T2 Biosystems and STAAR Surgical, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
T2 Biosystems 1 1 4 0 2.50
STAAR Surgical 0 0 2 0 3.00

T2 Biosystems currently has a consensus price target of $6.83, suggesting a potential upside of 22.90%. STAAR Surgical has a consensus price target of $20.50, suggesting a potential upside of 27.73%. Given STAAR Surgical’s stronger consensus rating and higher possible upside, analysts clearly believe STAAR Surgical is more favorable than T2 Biosystems.

Profitability

This table compares T2 Biosystems and STAAR Surgical’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
T2 Biosystems -1,497.70% -244.82% -78.53%
STAAR Surgical -2.47% -3.34% -1.93%

Risk and Volatility

T2 Biosystems has a beta of 1.48, indicating that its share price is 48% more volatile than the S&P 500. Comparatively, STAAR Surgical has a beta of 1.19, indicating that its share price is 19% more volatile than the S&P 500.

Insider and Institutional Ownership

59.7% of T2 Biosystems shares are held by institutional investors. Comparatively, 77.7% of STAAR Surgical shares are held by institutional investors. 38.7% of T2 Biosystems shares are held by insiders. Comparatively, 3.4% of STAAR Surgical shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock will outperform the market over the long term.

Valuation and Earnings

This table compares T2 Biosystems and STAAR Surgical’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
T2 Biosystems $4.10 million 48.59 -$54.80 million ($1.91) -2.91
STAAR Surgical $82.43 million 8.01 -$12.12 million ($0.05) -321.00

STAAR Surgical has higher revenue and earnings than T2 Biosystems. STAAR Surgical is trading at a lower price-to-earnings ratio than T2 Biosystems, indicating that it is currently the more affordable of the two stocks.

Summary

STAAR Surgical beats T2 Biosystems on 9 of the 14 factors compared between the two stocks.

T2 Biosystems Company Profile

T2 Biosystems, Inc. is an in vitro diagnostics company engaged in developing a technology platform offering an alternative to diagnostic methodologies. The Company’s T2 Magnetic Resonance platform (T2MR) enables detection of pathogens, biomarkers and other abnormalities in a range of unpurified patient sample types, including whole blood, plasma, serum, saliva, sputum and urine, and can detect cellular targets at limits of detection as one colony forming unit per milliliter (CFU/mL). The Company’s initial development efforts target sepsis, hemostasis and Lyme disease. T2MR is a miniaturized, magnetic resonance-based approach that measures how water molecules react in the presence of magnetic fields. Its platform detects a range of targets, including molecular targets, such as deoxyribonucleic acid (DNA), immunodiagnostics, such as proteins, and a range of hemostasis measurements. The Company offers T2Dx Instrument (T2Dx) and the T2Candida Panel.

STAAR Surgical Company Profile

STAAR Surgical Company designs, develops, manufactures and sells implantable lenses for the eye and delivery systems used to deliver the lenses into the eye. It operates in the ophthalmic surgical market segment. Its principal products are intraocular lenses used in cataract surgery and implantable collamer lenses used in refractive surgery. It makes lenses used across the world in corrective or refractive surgery, and makes lenses for use in surgery that treats cataracts. Its refractive surgery corrects the types of visual disorders that glasses or contact lenses have treated (myopia, hyperopia, astigmatism and presbyopia). Its refractive surgery corrects the types of visual disorders that glasses or contact lenses have treated (myopia, hyperopia, astigmatism and presbyopia). As of December 30, 2016, it sold its products in more than 60 countries, with direct distribution in the United States, Canada, Japan and Spain, and independent distribution in the remainder of the world.

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