Critical Review: Waters (NYSE:WAT) vs. TransMedics Group (NASDAQ:TMDX)

Waters (NYSE:WAT) and TransMedics Group (NASDAQ:TMDX) are both medical companies, but which is the superior investment? We will compare the two businesses based on the strength of their analyst recommendations, earnings, profitability, risk, dividends, institutional ownership and valuation.

Institutional and Insider Ownership

94.0% of Waters shares are held by institutional investors. Comparatively, 99.7% of TransMedics Group shares are held by institutional investors. 0.3% of Waters shares are held by insiders. Comparatively, 6.9% of TransMedics Group shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Earnings & Valuation

This table compares Waters and TransMedics Group”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Waters	$3.17 billion	11.52	$642.63 million	$7.87	47.20
TransMedics Group	$605.49 million	4.24	$190.29 million	$4.40	16.88

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

Risk & Volatility

Waters has a beta of 1.21, suggesting that its share price is 21% more volatile than the S&P 500. Comparatively, TransMedics Group has a beta of 1.91, suggesting that its share price is 91% more volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of recent ratings for Waters and TransMedics Group, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Waters	0	8	9	3	2.75
TransMedics Group	0	7	6	0	2.46

Waters presently has a consensus target price of $394.24, indicating a potential upside of 6.13%. TransMedics Group has a consensus target price of $134.00, indicating a potential upside of 80.37%. Given TransMedics Group’s higher possible upside, analysts plainly believe TransMedics Group is more favorable than Waters.

Profitability

This table compares Waters and TransMedics Group’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Waters	11.91%	15.60%	8.90%
TransMedics Group	27.04%	22.38%	8.46%

Summary

Waters beats TransMedics Group on 9 of the 15 factors compared between the two stocks.

About Waters

Waters Corporation provides analytical workflow solutions in Asia, the Americas, and Europe. It operates through two segments: Waters and TA. The company designs, manufactures, sells, and services high and ultra-performance liquid chromatography, as well as mass spectrometry (MS) technology systems and support products, including chromatography columns, other consumable products, and post-warranty service plans. It also designs, manufactures, sells, and services thermal analysis, rheometry, and calorimetry instruments; and develops and supplies software-based products that interface with its instruments, as well as other manufacturers' instruments. In addition, the company offers MS technology instruments are used in drug discovery and development comprising clinical trial testing, the analysis of proteins in disease processes, nutritional safety analysis, and environmental testing. Further, the company provides thermal analysis, rheometry, and calorimetry instruments for use in predicting the suitability and stability of fine chemicals, pharmaceuticals, water, polymers, metals, and viscous liquids for various industrial, consumer good, and healthcare products, as well as for life science research. Its products are used by clinical, pharmaceutical, biochemical, industrial, nutritional safety, environmental, academic, and governmental customers working in research and development, quality assurance, and other laboratory applications. The company was founded in 1958 and is headquartered in Milford, Massachusetts.

About TransMedics Group

TransMedics Group, Inc., a commercial-stage medical technology company, engages in transforming organ transplant therapy for end-stage organ failure patients in the United States and internationally. The company offers Organ Care System (OCS), a portable organ perfusion, optimization, and monitoring system that utilizes its proprietary and customized technology to replicate near-physiologic conditions for donor organs outside of the human body. Its OCS includes OCS LUNG for the preservation of standard criteria donor lungs for double-lung transplantation; OCS Heart, a technology for preservation of DBD donor hearts deemed unsuitable due to limitations of cold storage and for ex vivo reanimation, functional monitoring, and beating-heart preservation of donation-after-circulatory-death hearts; and OCS Liver for the preservation of DBD and DCD of donor livers. The company also developed national OCS program, a turnkey solution for outsourced organ retrieval; and provides OCS organ management and logistics services, including aviation and ground transportation, and other coordination activity. The company was founded in 1998 and is headquartered in Andover, Massachusetts.