Accuray (NASDAQ: ARAY) and Varian Medical Systems (NYSE:VAR) are both medical companies, but which is the superior investment? We will compare the two businesses based on the strength of their institutional ownership, earnings, dividends, profitability, risk, valuation and analyst recommendations.

Risk & Volatility

Accuray has a beta of 1.27, suggesting that its share price is 27% more volatile than the S&P 500. Comparatively, Varian Medical Systems has a beta of 0.58, suggesting that its share price is 42% less volatile than the S&P 500.

Insider and Institutional Ownership

76.7% of Accuray shares are owned by institutional investors. Comparatively, 99.6% of Varian Medical Systems shares are owned by institutional investors. 2.9% of Accuray shares are owned by insiders. Comparatively, 0.9% of Varian Medical Systems shares are owned by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Earnings & Valuation

This table compares Accuray and Varian Medical Systems’ top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Accuray $383.41 million 0.92 $640,996.00 ($0.35) -12.14
Varian Medical Systems $3.27 billion 2.99 $643.00 million $3.04 34.98

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

Profitability

This table compares Accuray and Varian Medical Systems’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Accuray -7.71% -61.62% -7.12%
Varian Medical Systems 9.50% 24.70% 11.12%

Analyst Ratings

This is a breakdown of current recommendations for Accuray and Varian Medical Systems, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Accuray 0 3 2 0 2.40
Varian Medical Systems 2 6 2 0 2.00

Accuray currently has a consensus target price of $6.00, suggesting a potential upside of 41.18%. Varian Medical Systems has a consensus target price of $94.94, suggesting a potential downside of 10.71%. Given Accuray’s stronger consensus rating and higher possible upside, research analysts plainly believe Accuray is more favorable than Varian Medical Systems.

Summary

Varian Medical Systems beats Accuray on 8 of the 12 factors compared between the two stocks.

About Accuray

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.

About Varian Medical Systems

Varian Medical Systems, Inc. is a manufacturer of medical devices and software for treating cancer and other medical conditions with radiotherapy, radiosurgery, proton therapy and brachytherapy medical devices and software for treating cancer and other medical conditions with radiotherapy, radiosurgery, proton therapy and brachytherapy. The Company also has Varian Particle Therapy (VPT) and the operations of the Ginzton Technology Center (GTC). Its VPT business develops, designs, manufactures, sells and services products and systems for delivering proton therapy, another form of external beam radiotherapy using proton beams for the treatment of cancer. Its ProBeam system is capable of delivering intensity modulated proton therapy (IMPT) using pencil beam scanning technology. Its ProBeam Compact is a single room proton therapy product.

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