Accuray (NASDAQ: ARAY) and Pacific Biosciences of California (NASDAQ:PACB) are both small-cap medical companies, but which is the superior business? We will contrast the two companies based on the strength of their dividends, valuation, profitability, institutional ownership, earnings, risk and analyst recommendations.

Institutional & Insider Ownership

78.9% of Accuray shares are owned by institutional investors. Comparatively, 70.5% of Pacific Biosciences of California shares are owned by institutional investors. 3.9% of Accuray shares are owned by insiders. Comparatively, 17.8% of Pacific Biosciences of California shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company is poised for long-term growth.

Analyst Ratings

This is a summary of recent recommendations and price targets for Accuray and Pacific Biosciences of California, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Accuray 0 3 4 0 2.57
Pacific Biosciences of California 0 2 1 0 2.33

Accuray currently has a consensus target price of $7.17, suggesting a potential upside of 46.26%. Pacific Biosciences of California has a consensus target price of $6.27, suggesting a potential upside of 126.23%. Given Pacific Biosciences of California’s higher possible upside, analysts clearly believe Pacific Biosciences of California is more favorable than Accuray.

Valuation and Earnings

This table compares Accuray and Pacific Biosciences of California’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Accuray $383.41 million 1.07 -$29.57 million ($0.34) -14.41
Pacific Biosciences of California $90.71 million 3.55 -$74.37 million ($0.92) -3.01

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

Profitability

This table compares Accuray and Pacific Biosciences of California’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Accuray -7.49% -55.18% -6.33%
Pacific Biosciences of California -95.97% -97.50% -59.40%

Risk and Volatility

Accuray has a beta of 1.28, meaning that its share price is 28% more volatile than the S&P 500. Comparatively, Pacific Biosciences of California has a beta of 1.75, meaning that its share price is 75% more volatile than the S&P 500.

Summary

Accuray beats Pacific Biosciences of California on 9 of the 13 factors compared between the two stocks.

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.

Pacific Biosciences of California Company Profile

Pacific Biosciences of California, Inc. designs, develops and manufactures sequencing systems to help scientists resolve genetically complex problems. The Company is engaged in the development, manufacturing and marketing of an integrated platform for genetic analysis. Its Single Molecule, Real-Time (SMRT) technology enables single molecule, real-time detection of biological processes. It offers The SMRT Cell, Phospholinked nucleotides and The PacBio RS II and Sequel instruments. Its SMRT technology enables the observation of deoxyribonucleic acid (DNA) synthesis as it occurs in real-time by harnessing the natural process of DNA replication, which is actuated by the DNA polymerase. Its phospholinked nucleotides have a fluorescent dye attached to the phosphate chain of the nucleotide rather than to the base. The PacBio RS II and Sequel instruments include optics, automated liquid handling, a touchscreen control interface and computational hardware and software.

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