Obalon Therptcs (NASDAQ: OBLN) and Glaukos Corporation (NYSE:GKOS) are both small-cap medical companies, but which is the better investment? We will contrast the two businesses based on the strength of their earnings, institutional ownership, dividends, risk, valuation, profitability and analyst recommendations.

Institutional and Insider Ownership

45.0% of Obalon Therptcs shares are held by institutional investors. 16.4% of Obalon Therptcs shares are held by insiders. Comparatively, 16.4% of Glaukos Corporation shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.

Profitability

This table compares Obalon Therptcs and Glaukos Corporation’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Obalon Therptcs -566.87% -108.07% -48.50%
Glaukos Corporation -0.81% 3.52% 3.06%

Valuation & Earnings

This table compares Obalon Therptcs and Glaukos Corporation’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Obalon Therptcs $4.98 million 34.36 -$27.12 million ($6.90) -1.47
Glaukos Corporation $139.94 million 8.42 $8.15 million ($0.05) -684.00

Glaukos Corporation has higher revenue and earnings than Obalon Therptcs. Glaukos Corporation is trading at a lower price-to-earnings ratio than Obalon Therptcs, indicating that it is currently the more affordable of the two stocks.

Analyst Recommendations

This is a summary of recent ratings and recommmendations for Obalon Therptcs and Glaukos Corporation, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Obalon Therptcs 1 0 3 0 2.50
Glaukos Corporation 0 0 7 0 3.00

Obalon Therptcs presently has a consensus target price of $15.25, suggesting a potential upside of 49.95%. Glaukos Corporation has a consensus target price of $51.33, suggesting a potential upside of 50.10%. Given Glaukos Corporation’s stronger consensus rating and higher possible upside, analysts clearly believe Glaukos Corporation is more favorable than Obalon Therptcs.

Summary

Glaukos Corporation beats Obalon Therptcs on 9 of the 11 factors compared between the two stocks.

Obalon Therptcs Company Profile

Obalon Therapeutics, Inc. is a United States-based commercial-stage medical device company focused on developing and commercializing medical devices to treat obese and overweight people by facilitating weight loss. The Company’s product, Obalon balloon system, is a swallowable, gas-filled intragastric balloon designed to provide weight loss in obese patients. The Obalon balloon system is intended to be used as an adjunct to a moderate intensity diet and behavior modification program. All balloons must be removed six months after the first balloon is placed. The Obalon balloon system intends to provide patients and physicians with a reversible and repeatable weight loss solution in an outpatient setting, without altering patient anatomy or requiring surgery. The Company has received Premarket approval (PMA) for its Obalon balloon system based on the results of its United States pivotal clinical trial, referred to as the SMART trial.

Glaukos Corporation Company Profile

Glaukos Corporation is an ophthalmic medical technology company. The Company focuses on the development and commercialization of products and procedures for the treatment of glaucoma. It offers iStent, a micro-invasive glaucoma surgery (MIGS) device. The iStent is a micro-bypass stent inserted through the small corneal incision made during cataract surgery and placed into Schlemm’s canal, a circular channel in the eye that collects aqueous humor and delivers it back into the bloodstream. It is developing three additional pipeline products: the iStent Inject, the iStent Supra and iDose. The iStent Inject includes two stents pre-loaded in an auto-injection inserter. The iStent Supra is designed to access an alternative drainage space within the eye. iDose is a drug delivery system that is designed to be implanted in the eye to continuously deliver therapeutic levels of medication for extended periods of time to lower intraocular pressure in glaucoma patients.

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