Reviewing Pulmonx (NASDAQ:LUNG) & Spectral Medical (OTCMKTS:EDTXF)

Spectral Medical (OTCMKTS:EDTXF) and Pulmonx (NASDAQ:LUNG) are both small-cap medical companies, but which is the better investment? We will compare the two businesses based on the strength of their profitability, earnings, institutional ownership, dividends, analyst recommendations, valuation and risk.

Earnings and Valuation

This table compares Spectral Medical and Pulmonx”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Spectral Medical	$1.18 million	114.19	-$11.60 million	($0.07)	-6.76
Pulmonx	$83.79 million	3.53	-$60.84 million	($1.44)	-5.17

Spectral Medical has higher earnings, but lower revenue than Pulmonx. Spectral Medical is trading at a lower price-to-earnings ratio than Pulmonx, indicating that it is currently the more affordable of the two stocks.

Volatility & Risk

Spectral Medical has a beta of 0.87, indicating that its stock price is 13% less volatile than the S&P 500. Comparatively, Pulmonx has a beta of 0.5, indicating that its stock price is 50% less volatile than the S&P 500.

Analyst Ratings

This is a summary of current recommendations and price targets for Spectral Medical and Pulmonx, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Spectral Medical	0	0	0	0	0.00
Pulmonx	0	2	4	0	2.67

Pulmonx has a consensus target price of $12.75, indicating a potential upside of 71.37%. Given Pulmonx’s stronger consensus rating and higher possible upside, analysts clearly believe Pulmonx is more favorable than Spectral Medical.

Profitability

This table compares Spectral Medical and Pulmonx’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Spectral Medical	-1,245.87%	N/A	-351.89%
Pulmonx	-67.31%	-55.36%	-33.53%

Insider and Institutional Ownership

91.0% of Pulmonx shares are held by institutional investors. 1.5% of Spectral Medical shares are held by insiders. Comparatively, 5.7% of Pulmonx shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Summary

Pulmonx beats Spectral Medical on 9 of the 14 factors compared between the two stocks.

About Spectral Medical

Spectral Medical Inc. focuses on the development and commercialization of products for the treatment of septic shock in the United States, Italy, Ireland, and internationally. The company markets Endotoxin Activity Assay, a rapid in vitro diagnostic test for the detection of components of gram negative bacterial cell wall; and Polymyxin B Hemoperfusion, a therapeutic hemoperfusion device that removes endotoxin from the bloodstream. It also develops and manufactures monoclonal and polyclonal antibodies, recombinant cardiac proteins, and calibrators for use in the research and development, as well as products that are manufactured by other diagnostic companies. The company was formerly known as Spectral Diagnostics Inc. and changed its name to Spectral Medical Inc. in December 2014. Spectral Medical Inc. was incorporated in 1991 and is headquartered in Toronto, Canada.

About Pulmonx

Pulmonx Corporation, a commercial-stage medical technology company, provides minimally invasive devices for the treatment of chronic obstructive pulmonary diseases. The company offers Zephyr Endobronchial Valve, a solution for the treatment of patients with hyperinflation associated with severe emphysema; and Chartis Pulmonary Assessment System, a balloon catheter and console system with flow and pressure sensors that are used to assess the presence of collateral ventilation. It also offers StratX Lung Analysis Platform, a cloud-based quantitative computed tomography analysis service that offers information on emphysema destruction, fissure completeness, and lobar volume to help identify target lobes for the treatment with Zephyr Valves. The company serves emphysema patients in the United States, Europe, the Middle East, Africa, the Asia-Pacific, and internationally. The company was formerly known as Pulmonx and changed its name to Pulmonx Corporation in December 2013. Pulmonx Corporation was incorporated in 1995 and is headquartered in Redwood City, California.