Masimo (NASDAQ:MASI) and Aradigm (NASDAQ:ARDM) are both medical companies, but which is the better stock? We will compare the two businesses based on the strength of their risk, dividends, institutional ownership, earnings, valuation, profitability and analyst recommendations.

Valuation and Earnings

This table compares Masimo and Aradigm’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Masimo $798.11 million 7.60 $131.61 million $2.45 47.81
Aradigm $14.47 million 1.45 -$10.70 million ($0.72) -1.92

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

Analyst Recommendations

This is a summary of recent recommendations and price targets for Masimo and Aradigm, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Masimo 0 1 4 0 2.80
Aradigm 0 1 0 0 2.00

Masimo currently has a consensus target price of $109.00, indicating a potential downside of 6.94%. Given Masimo’s stronger consensus rating and higher probable upside, equities research analysts clearly believe Masimo is more favorable than Aradigm.

Profitability

This table compares Masimo and Aradigm’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Masimo 15.30% 21.49% 17.18%
Aradigm -244.15% N/A -240.23%

Insider & Institutional Ownership

83.3% of Masimo shares are owned by institutional investors. Comparatively, 30.0% of Aradigm shares are owned by institutional investors. 12.6% of Masimo shares are owned by company insiders. Comparatively, 4.5% of Aradigm shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Volatility and Risk

Masimo has a beta of 1, suggesting that its stock price has a similar volatility profile to the S&P 500.Comparatively, Aradigm has a beta of 0.58, suggesting that its stock price is 42% less volatile than the S&P 500.

Summary

Masimo beats Aradigm on 14 of the 14 factors compared between the two stocks.

About Masimo

Masimo Corporation, a medical technology company, develops, manufactures, and markets noninvasive monitoring technologies worldwide. The company offers Masimo Signal Extraction Technology (SET) pulse oximetry with measure-through-motion and low-perfusion pulse oximetry monitoring to address the primary limitations of conventional pulse oximetry. It also provides Masimo rainbow SET platform that includes rainbow SET Pulse CO-Oximetry products that noninvasively monitor hemoglobin species, including oxygen saturation, pulse rate, perfusion index, pleth variability index, and respiration rate from the pleth; noninvasively monitor hemoglobin concentration, and carboxyhemoglobin and methemoglobin saturation; monitor arterial oxygen saturation and acoustic respiration rate; and calculates oxygen content and oxygen reserve index. In addition, the company offers SedLine brain function monitoring technology to measure the brain's electrical activity by detecting EEG signals; capnography and gas monitoring products comprising external plug-in-and-measure capnography and gas analyzers, integrated modules, and handheld capnograph and capnometer devices; and O3 regional oximetry for tissue oxygen saturation measurement. Further, it provides Patient SafetyNet, a surveillance, remote monitoring, and clinician notification solution; MyView, a wireless presence-detection system; and connectivity devices. The company provides its products directly, as well as through distributors and original equipment manufacturers partners to hospitals, emergency medical service providers, physician offices, veterinarians, long term care facilities, and consumers. Masimo Corporation has a strategic partnership with NU Hospitals. The company was founded in 1989 and is headquartered in Irvine, California.

About Aradigm

Aradigm Corp. operates as a pharmaceutical company, which focuses on the development and commercialization of drugs delivered by inhalation for the prevention and treatment of severe respiratory diseases by pulmonologists. Its technologies include diabetes and pain management, AERx essence devices. The company was founded in 1991 and is headquartered in Hayward, CA.

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