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

Earnings & Valuation

This table compares Apollo Endosurgery and K2M Group’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Apollo Endosurgery $64.31 million 2.19 -$27.29 million ($2.01) -3.21
K2M Group $258.03 million 4.62 -$37.14 million ($0.87) -31.41

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

Analyst Ratings

This is a breakdown of current ratings and price targets for Apollo Endosurgery and K2M Group, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Apollo Endosurgery 0 2 1 0 2.33
K2M Group 0 7 2 0 2.22

Apollo Endosurgery currently has a consensus target price of $9.83, suggesting a potential upside of 52.45%. K2M Group has a consensus target price of $26.43, suggesting a potential downside of 3.30%. Given Apollo Endosurgery’s stronger consensus rating and higher possible upside, equities analysts clearly believe Apollo Endosurgery is more favorable than K2M Group.

Profitability

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

Net Margins Return on Equity Return on Assets
Apollo Endosurgery -46.55% -58.61% -27.54%
K2M Group -14.49% -16.27% -10.15%

Institutional & Insider Ownership

39.1% of Apollo Endosurgery shares are owned by institutional investors. 52.8% of Apollo Endosurgery shares are owned by company insiders. Comparatively, 6.0% of K2M Group shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company will outperform the market over the long term.

Volatility and Risk

Apollo Endosurgery has a beta of 0.03, indicating that its share price is 97% less volatile than the S&P 500. Comparatively, K2M Group has a beta of 1.61, indicating that its share price is 61% more volatile than the S&P 500.

Summary

K2M Group beats Apollo Endosurgery on 8 of the 14 factors compared between the two stocks.

Apollo Endosurgery Company Profile

Apollo Endosurgery, Inc., a medical technology company, focuses on the design, development, and commercialization of medical devices for the treatment of obesity. The company offers endo-bariatric products, such as Orbera intragastric balloon system and Orbera365 Managed Weight Loss System, which are non-surgical alternatives for the treatment of overweight and obese adults; and OverStitch endoscopic suturing system that enables endoscopic procedures by allowing physicians to place full-thickness sutures and secure the approximation of tissue through flexible endoscope. It also provides surgical products, including Lap-Band system, a system designed to provide minimally invasive long-term treatment of obesity; and accessories used in laparoscopic bariatric surgeries. The company sells its products primarily in the United States, Europe, Australia, Brazil, and Canada. Apollo Endosurgery, Inc. was founded in 2005 and is headquartered in Austin, Texas.

K2M Group Company Profile

K2M Group Holdings, Inc., a medical device company, provides spine and minimally invasive solutions in the United States and internationally. The company offers implants, disposables, and instruments primarily to hospitals for use by spine surgeons to treat spinal pathologies, such as deformity, trauma, and tumor. Its complex spine products include EVEREST, MESA, and MESA 2 deformity spinal systems; NILE alternative and proximal fixation spinal systems; MESA rail deformity spinal systems; Cricket spinal correction rod reduction instrumentation; CAPRI corpectomy cage systems; MESA small stature, rail small stature, and mini spinal systems; SERENGETI complex spine minimally invasive retractor systems; RAVINE complex spine lateral access systems; SANTORINI corpectomy cage systems; YUKON OCT spinal systems; and PALO ALTO cervical static corpectomy cage systems. The company's minimally invasive surgery products consist of EVEREST minimally invasive spinal and XT spinal, SERENGETI minimally invasive retractor, MOJAVE PL 3D expandable interbody, RAVINE lateral access, CASCADIA lateral 3D interbody, ALEUTIAN lateral interbody, and TERRA NOVA minimally invasive access systems. In addition, its degenerative spine products comprise EVEREST degenerative spinal, CASCADIA and ALEUTIAN interbody, SAHARA AL expandable stabilization, RHINE cervical disc, CHESAPEAKE interbody, PYRENEES cervical plate, and BLUE RIDGE hybrid cervical plate systems. Further, the company provides Balance ACS, a platform that includes tools to assist surgeons with obtaining authorization from healthcare insurers. K2M Group Holdings, Inc. markets and sells its products through direct sales employees, independent sales agencies, and distributor partners. The company was founded in 2004 and is headquartered in Leesburg, Virginia.

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