Surmodics (NASDAQ:SRDX – Get Free Report) and Neuronetics (NASDAQ:STIM – Get Free Report) are both small-cap medical companies, but which is the superior business? We will compare the two companies based on the strength of their institutional ownership, earnings, profitability, analyst recommendations, dividends, valuation and risk.
Profitability
This table compares Surmodics and Neuronetics’ net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| Surmodics | -11.48% | -4.39% | -2.95% |
| Neuronetics | -50.09% | -141.24% | -32.77% |
Institutional & Insider Ownership
96.6% of Surmodics shares are owned by institutional investors. Comparatively, 53.6% of Neuronetics shares are owned by institutional investors. 8.9% of Surmodics shares are owned by company insiders. Comparatively, 9.8% of Neuronetics shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.
Earnings & Valuation
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| Surmodics | $126.08 million | 3.93 | -$11.54 million | ($1.01) | -34.28 |
| Neuronetics | $72.71 million | 1.61 | -$30.19 million | ($1.23) | -3.14 |
Surmodics has higher revenue and earnings than Neuronetics. Surmodics is trading at a lower price-to-earnings ratio than Neuronetics, indicating that it is currently the more affordable of the two stocks.
Risk & Volatility
Surmodics has a beta of 1.2, suggesting that its share price is 20% more volatile than the S&P 500. Comparatively, Neuronetics has a beta of 2.17, suggesting that its share price is 117% more volatile than the S&P 500.
Analyst Recommendations
This is a summary of recent ratings for Surmodics and Neuronetics, as provided by MarketBeat.com.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| Surmodics | 0 | 4 | 0 | 0 | 2.00 |
| Neuronetics | 0 | 1 | 3 | 0 | 2.75 |
Surmodics presently has a consensus target price of $50.00, indicating a potential upside of 44.43%. Neuronetics has a consensus target price of $4.67, indicating a potential upside of 20.90%. Given Surmodics’ higher possible upside, equities analysts plainly believe Surmodics is more favorable than Neuronetics.
Summary
Surmodics beats Neuronetics on 9 of the 14 factors compared between the two stocks.
About Surmodics
Surmodics, Inc., together with its subsidiaries, provides performance coating technologies for intravascular medical devices, and chemical and biological components for in vitro diagnostic immunoassay tests and microarrays in the United States and internationally. It operates through two segments, Medical Device and In Vitro Diagnostics (IVD). The Medical Device segment engages in the provision of surface modification coating technologies to enhance access, deliverability, and predictable deployment of medical devices; and drug-delivery coating technologies to provide site-specific drug-delivery from the surface of a medical device for neurovascular, peripheral, coronary, and structural heart, and other markets, as well as manufacturing of vascular intervention medical devices, including drug-coated balloons, mechanical thrombectomy devices, and radial access balloon catheters and guide sheaths. The IVD segment develops, manufactures, and sells chemical and biological components for in vitro diagnostic immunoassay and molecular tests, as well as diagnostic and biomedical research markets. This segment offers protein stabilizers, substrates, surface coatings, and antigens. The company was founded in 1979 and is headquartered in Eden Prairie, Minnesota.
About Neuronetics
Neuronetics, Inc., a commercial stage medical technology company, designs, develops, and markets products for patients with neurohealth disorders in the United States and internationally. The company offers NeuroStar Advanced Therapy System, a non-invasive and non-systemic office-based treatment to treat adult patients with major depressive disorder. Its NeuroStar Advanced Therapy System uses transcranial magnetic stimulation to create a pulsed, MRI-strength magnetic field that induces electrical currents designed to stimulate specific areas of the brain associated with mood. The company sells its products through its sales and customer support team to psychiatrists. The company was incorporated in 2001 and is headquartered in Malvern, Pennsylvania.
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