CryoLife (NYSE: CRY) and K2M Group (NASDAQ:KTWO) are both small-cap medical companies, but which is the better business? We will contrast the two businesses based on the strength of their institutional ownership, profitability, earnings, analyst recommendations, valuation, risk and dividends.

Profitability

This table compares CryoLife and K2M Group’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
CryoLife 5.28% 6.43% 4.33%
K2M Group -16.22% -16.02% -10.73%

Risk and Volatility

CryoLife has a beta of 0.81, suggesting that its stock price is 19% less volatile than the S&P 500. Comparatively, K2M Group has a beta of 1.35, suggesting that its stock price is 35% more volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of recent ratings and target prices for CryoLife and K2M Group, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
CryoLife 0 0 4 0 3.00
K2M Group 0 1 7 1 3.00

CryoLife presently has a consensus price target of $23.63, suggesting a potential upside of 23.37%. K2M Group has a consensus price target of $25.13, suggesting a potential upside of 39.66%. Given K2M Group’s higher probable upside, analysts clearly believe K2M Group is more favorable than CryoLife.

Institutional & Insider Ownership

73.3% of CryoLife shares are held by institutional investors. Comparatively, 99.2% of K2M Group shares are held by institutional investors. 6.0% of CryoLife shares are held by insiders. Comparatively, 5.8% of K2M Group shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Valuation & Earnings

This table compares CryoLife and K2M Group’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
CryoLife $180.38 million 3.55 $10.77 million $0.28 68.39
K2M Group $236.63 million 3.29 -$41.66 million ($0.96) -18.74

CryoLife has higher earnings, but lower revenue than K2M Group. K2M Group is trading at a lower price-to-earnings ratio than CryoLife, indicating that it is currently the more affordable of the two stocks.

Summary

CryoLife beats K2M Group on 7 of the 13 factors compared between the two stocks.

CryoLife Company Profile

CryoLife, Inc. (CryoLife) is a medical device manufacturer and processor, and is engaged in the distribution of medical devices and implantable human tissues used in cardiac surgical procedures. The Company operates through two segments: Medical Devices and Preservation Services. The Medical Devices segment includes medical devices, such as BioGlue Surgical Adhesive, BioFoam Surgical Matrix, On-X Life Technologies Holdings, Inc. valves and surgical products, CardioGenesis cardiac laser therapy product line, PerClot and PhotoFix. PhotoFix is a pericardial patch stabilized using a dye-mediated photo-fixation process that requires no glutaraldehyde. The Preservation Services segment includes external services, such as preservation of cardiac and vascular tissues. The cardiac and vascular human tissues distributed by CryoLife include the CryoValve SG pulmonary heart valve and the CryoPatch SG pulmonary cardiac patch, both of which are processed using CryoLife’s SynerGraft technology.

K2M Group Company Profile

K2M Group Holdings, Inc. is a medical device company focused on designing, developing and commercializing spine and minimally invasive technologies and techniques. The Company’s solutions are focused on achieving three-dimensional Total Body Balance. Its spine products are used by spine surgeons to treat spinal pathologies, such as deformity (primarily scoliosis), trauma and tumor. Its products consist of implants, disposables and instruments, which are marketed and sold primarily to hospitals for use by spine surgeons. As of December 31, 2016, its product portfolio consisted of 83 product lines that are used in complex spine, minimally invasive surgery (MIS) and degenerative surgeries. Its technologies include EVEREST, MESA, Rail 4D, Quicket Deformity, CASCADIA, CAPRI, SERENGETI, RAVINE and tifix. Its degenerative spine technologies are used to treat degenerative spine disorders and include products, such as cervical, thoracic and lumbar spinal fusion devices and interbody devices.

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