Reviewing K2M Group (KTWO) and SurModics (SRDX)
K2M Group (NASDAQ: KTWO) and SurModics (NASDAQ:SRDX) are both small-cap healthcare companies, but which is the superior investment? We will contrast the two companies based on the strength of their profitability, earnings, valuation, analyst recommendations, dividends, risk and institutional ownership.
This table compares K2M Group and SurModics’ net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
Institutional and Insider Ownership
98.0% of K2M Group shares are owned by institutional investors. Comparatively, 85.6% of SurModics shares are owned by institutional investors. 5.8% of K2M Group shares are owned by insiders. Comparatively, 7.7% of SurModics shares are owned by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.
Volatility & Risk
K2M Group has a beta of 1.34, meaning that its share price is 34% more volatile than the S&P 500. Comparatively, SurModics has a beta of 0.85, meaning that its share price is 15% less volatile than the S&P 500.
This is a breakdown of current ratings and target prices for K2M Group and SurModics, as reported by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
K2M Group presently has a consensus target price of $24.38, indicating a potential upside of 17.75%. SurModics has a consensus target price of $40.00, indicating a potential upside of 48.15%. Given SurModics’ stronger consensus rating and higher possible upside, analysts clearly believe SurModics is more favorable than K2M Group.
Valuation and Earnings
This table compares K2M Group and SurModics’ revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|K2M Group||$236.63 million||3.79||-$41.66 million||($0.96)||-21.56|
|SurModics||$73.11 million||4.84||$3.92 million||$0.29||93.11|
SurModics has lower revenue, but higher earnings than K2M Group. K2M Group is trading at a lower price-to-earnings ratio than SurModics, indicating that it is currently the more affordable of the two stocks.
SurModics beats K2M Group on 10 of the 14 factors compared between the two stocks.
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.
SurModics Company Profile
Surmodics, Inc. is a provider of medical device and in vitro diagnostic technologies to the healthcare industry. The Company operates through two segments: Medical Device and In Vitro Diagnostics. The Company’s Medical Device segment consists of surface modification coating technologies to improve access, deliverability and predictable deployment of medical devices; international cardiology and peripheral balloon design, development and manufacturing, as well as drug delivery coating technologies to provide site-specific drug delivery from the surface of a medical device. The Company’s In Vitro Diagnostics segment manufactures or sells components for in vitro diagnostic immunoassay and molecular tests. The In Vitro Diagnostics segment manufactures and sells surface coatings to the diagnostic, biomedical research and life science markets. In Vitro Diagnostics segment offers protein stabilization reagents, substrates, antigens and surface coatings.
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