STAAR Surgical (NASDAQ: STAA) and Tandem Diabetes Care (NASDAQ:TNDM) are both small-cap medical companies, but which is the better stock? We will contrast the two businesses based on the strength of their analyst recommendations, dividends, risk, valuation, earnings, profitability and institutional ownership.

Volatility and Risk

STAAR Surgical has a beta of 1.19, meaning that its share price is 19% more volatile than the S&P 500. Comparatively, Tandem Diabetes Care has a beta of 0.17, meaning that its share price is 83% less volatile than the S&P 500.

Earnings & Valuation

This table compares STAAR Surgical and Tandem Diabetes Care’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
STAAR Surgical $82.43 million 8.06 -$12.12 million ($0.04) -403.75
Tandem Diabetes Care $84.25 million 0.32 -$83.44 million ($19.79) -0.13

STAAR Surgical has higher earnings, but lower revenue than Tandem Diabetes Care. STAAR Surgical is trading at a lower price-to-earnings ratio than Tandem Diabetes Care, indicating that it is currently the more affordable of the two stocks.

Insider and Institutional Ownership

77.7% of STAAR Surgical shares are held by institutional investors. 5.6% of STAAR Surgical shares are held by insiders. Comparatively, 20.9% of Tandem Diabetes Care shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.

Analyst Recommendations

This is a breakdown of current ratings for STAAR Surgical and Tandem Diabetes Care, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
STAAR Surgical 0 0 2 0 3.00
Tandem Diabetes Care 0 4 2 0 2.33

STAAR Surgical presently has a consensus target price of $20.50, indicating a potential upside of 26.93%. Tandem Diabetes Care has a consensus target price of $13.00, indicating a potential upside of 392.42%. Given Tandem Diabetes Care’s higher possible upside, analysts plainly believe Tandem Diabetes Care is more favorable than STAAR Surgical.

Profitability

This table compares STAAR Surgical and Tandem Diabetes Care’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
STAAR Surgical -2.47% -3.34% -1.93%
Tandem Diabetes Care -79.45% -1,177.11% -74.29%

Summary

STAAR Surgical beats Tandem Diabetes Care on 9 of the 12 factors compared between the two stocks.

About STAAR Surgical

STAAR Surgical Company designs, develops, manufactures and sells implantable lenses for the eye and delivery systems used to deliver the lenses into the eye. It operates in the ophthalmic surgical market segment. Its principal products are intraocular lenses used in cataract surgery and implantable collamer lenses used in refractive surgery. It makes lenses used across the world in corrective or refractive surgery, and makes lenses for use in surgery that treats cataracts. Its refractive surgery corrects the types of visual disorders that glasses or contact lenses have treated (myopia, hyperopia, astigmatism and presbyopia). Its refractive surgery corrects the types of visual disorders that glasses or contact lenses have treated (myopia, hyperopia, astigmatism and presbyopia). As of December 30, 2016, it sold its products in more than 60 countries, with direct distribution in the United States, Canada, Japan and Spain, and independent distribution in the remainder of the world.

About Tandem Diabetes Care

Tandem Diabetes Care, Inc. is a medical device company. The Company is engaged in designing, developing and commercializing products for people with insulin-dependent diabetes. The Company manufactures and sells three insulin pump products, which include t:slim Insulin Delivery System (t:slim), t:flex Insulin Delivery System (t:flex) and t:slim G4 Insulin Delivery System (t:slim G4). Its technology platform features Micro-Delivery Technology, a miniaturized pumping mechanism, which draws insulin from a flexible bag within the pump’s cartridge rather than relying on a syringe and plunger mechanism. It also features a software, which is a vivid color touch screen and a micro- universal serial bus (USB) connection that supports both a rechargeable battery and uploads to t:connect Diabetes Management Application (t:connect), its custom cloud-based data management application that provides display therapy management data from the pump and supported blood glucose meters.

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