ResMed (NYSE: RMD) and Luminex Corporation (NASDAQ:LMNX) are both medical companies, but which is the superior investment? We will compare the two companies based on the strength of their valuation, profitability, dividends, risk, analyst recommendations, earnings and institutional ownership.

Analyst Recommendations

This is a summary of recent recommendations and price targets for ResMed and Luminex Corporation, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
ResMed 3 5 2 0 1.90
Luminex Corporation 1 3 1 0 2.00

ResMed currently has a consensus target price of $64.80, indicating a potential downside of 15.35%. Luminex Corporation has a consensus target price of $21.25, indicating a potential upside of 3.36%. Given Luminex Corporation’s stronger consensus rating and higher probable upside, analysts plainly believe Luminex Corporation is more favorable than ResMed.

Earnings and Valuation

This table compares ResMed and Luminex Corporation’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
ResMed $2.07 billion 5.26 $568.89 million $2.41 31.76
Luminex Corporation $297.73 million 3.04 $49.82 million $0.32 64.25

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

Dividends

ResMed pays an annual dividend of $1.40 per share and has a dividend yield of 1.8%. Luminex Corporation pays an annual dividend of $0.24 per share and has a dividend yield of 1.2%. ResMed pays out 58.1% of its earnings in the form of a dividend. Luminex Corporation pays out 75.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. ResMed is clearly the better dividend stock, given its higher yield and lower payout ratio.

Profitability

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

Net Margins Return on Equity Return on Assets
ResMed 16.56% 21.99% 11.86%
Luminex Corporation 4.72% 4.81% 4.37%

Volatility and Risk

ResMed has a beta of 0.77, meaning that its stock price is 23% less volatile than the S&P 500. Comparatively, Luminex Corporation has a beta of 0.29, meaning that its stock price is 71% less volatile than the S&P 500.

Institutional and Insider Ownership

60.1% of ResMed shares are held by institutional investors. Comparatively, 78.0% of Luminex Corporation shares are held by institutional investors. 1.8% of ResMed shares are held by company insiders. Comparatively, 6.9% of Luminex Corporation shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.

Summary

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

About ResMed

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.

About Luminex Corporation

Luminex Corporation develops, manufactures and sells biological testing technologies with applications throughout the diagnostics, pharmaceutical and life sciences industries. The Company’s products are focused on the molecular diagnostic testing market, which includes human genetics, personalized medicine and infectious disease segments. The Company has a range of instruments using its xMAP technology, which includes its LUMINEX 100/200 systems offer 100-plex testing; the Company’s FLEXMAP 3D system is its high-throughput, 500-plex testing system, and its MAGPIX system provides 50-plex testing using imaging rather than flow cytometry. By using its xMAP technology, the end users are able to generate multiple simultaneous results per sample. The Company primarily serves the diagnostics, pharmaceutical and life sciences industries by marketing products, including its testing equipment and assays, to a range of testing laboratories.

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