ResMed (NYSE: RMD) and Illumina (NASDAQ:ILMN) are both large-cap medical companies, but which is the superior stock? We will compare the two businesses based on the strength of their profitability, institutional ownership, risk, valuation, analyst recommendations, dividends and earnings.

Profitability

This table compares ResMed and Illumina’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
ResMed 12.98% 22.75% 12.86%
Illumina 26.56% 21.52% 11.94%

Analyst Recommendations

This is a breakdown of recent recommendations for ResMed and Illumina, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
ResMed 3 5 3 0 2.00
Illumina 1 6 13 0 2.60

ResMed currently has a consensus price target of $68.80, suggesting a potential downside of 22.92%. Illumina has a consensus price target of $242.18, suggesting a potential upside of 15.58%. Given Illumina’s stronger consensus rating and higher possible upside, analysts clearly believe Illumina is more favorable than ResMed.

Institutional and Insider Ownership

61.4% of ResMed shares are held by institutional investors. Comparatively, 92.1% of Illumina shares are held by institutional investors. 1.8% of ResMed shares are held by insiders. Comparatively, 0.9% of Illumina shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock is poised for long-term growth.

Dividends

ResMed pays an annual dividend of $1.40 per share and has a dividend yield of 1.6%. Illumina does not pay a dividend. ResMed pays out 70.0% of its earnings in the form of a dividend. Illumina has increased its dividend for 2 consecutive years.

Valuation and Earnings

This table compares ResMed and Illumina’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
ResMed $2.07 billion 6.17 $342.28 million $2.00 44.63
Illumina $2.75 billion 11.12 $726.00 million $4.93 42.50

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

Volatility and Risk

ResMed has a beta of 0.92, suggesting that its stock price is 8% less volatile than the S&P 500. Comparatively, Illumina has a beta of 0.92, suggesting that its stock price is 8% less volatile than the S&P 500.

Summary

Illumina beats ResMed on 11 of the 16 factors compared between the two stocks.

ResMed Company Profile

ResMed Inc. is a holding company. The Company is engaged in the development, manufacturing, distribution and marketing of medical devices and cloud-based software applications that diagnose, treat and manage respiratory disorders, including sleep disordered breathing (SDB), chronic obstructive pulmonary disease (COPD), neuromuscular disease and other diseases. SDB includes obstructive sleep apnea (OSA) and other respiratory disorders that occur during sleep. Its cloud-based software digital health applications, along with its devices, are designed to provide connected care to improve patient outcomes. The Company’s portfolio of products includes devices, diagnostic products, mask systems, headgear and other accessories, dental devices, portable oxygen concentrators (POCs) and cloud-based software informatics solutions. The Company produces Continuous Positive Airway Pressure (CPAP), Variable Positive Airway Pressure (VPAP) and AutoSet systems for the titration and treatment of SDB.

Illumina Company Profile

Illumina, Inc. (Illumina) is a provider of sequencing- and array-based solutions for genetic analysis. The Company operates through two segments: Core Illumina and the consolidated variable interest entities (VIEs), which include the activities of GRAIL, Inc. (GRAIL) and Helix Holdings I, LLC (Helix). Core Illumina consists of its core operations. Core Illumina’s products and services serve customers in the research, clinical and applied markets, and enable the adoption of a range of genomic solutions. The Company’s portfolio of integrated systems, consumables and analysis tools addresses the range of genomic complexity, price points, and throughput, enabling customers to select the solution for their research or clinical challenge. The Company provides reproductive-health solutions, including noninvasive prenatal testing (NIPT), preimplantation genetic screening and diagnosis, and neonatal and genetic health testing.

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