Critical Analysis: Tactile Systems Technology (NASDAQ:TCMD) vs. Alphatec (NASDAQ:ATEC)

Tactile Systems Technology (NASDAQ:TCMD) and Alphatec (NASDAQ:ATEC) are both small-cap medical companies, but which is the superior investment? We will compare the two businesses based on the strength of their earnings, analyst recommendations, dividends, institutional ownership, valuation, risk and profitability.

Volatility and Risk

Tactile Systems Technology has a beta of 1.17, suggesting that its share price is 17% more volatile than the S&P 500. Comparatively, Alphatec has a beta of 1.31, suggesting that its share price is 31% more volatile than the S&P 500.

Analyst Recommendations

This is a summary of recent recommendations and price targets for Tactile Systems Technology and Alphatec, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Tactile Systems Technology	0	2	0	1	2.67
Alphatec	0	1	8	0	2.89

Tactile Systems Technology currently has a consensus price target of $23.00, indicating a potential upside of 28.85%. Alphatec has a consensus price target of $17.11, indicating a potential upside of 70.09%. Given Alphatec’s stronger consensus rating and higher probable upside, analysts clearly believe Alphatec is more favorable than Tactile Systems Technology.

Institutional and Insider Ownership

83.4% of Tactile Systems Technology shares are held by institutional investors. Comparatively, 66.4% of Alphatec shares are held by institutional investors. 1.0% of Tactile Systems Technology shares are held by insiders. Comparatively, 22.8% of Alphatec 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.

Profitability

This table compares Tactile Systems Technology and Alphatec’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Tactile Systems Technology	5.42%	9.24%	6.56%
Alphatec	-31.06%	-541.39%	-22.99%

Earnings & Valuation

This table compares Tactile Systems Technology and Alphatec”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Tactile Systems Technology	$285.05 million	1.50	$28.51 million	$0.65	27.46
Alphatec	$482.26 million	2.96	-$186.64 million	($1.28)	-7.86

Tactile Systems Technology has higher earnings, but lower revenue than Alphatec. Alphatec is trading at a lower price-to-earnings ratio than Tactile Systems Technology, indicating that it is currently the more affordable of the two stocks.

Summary

Tactile Systems Technology beats Alphatec on 8 of the 15 factors compared between the two stocks.

About Tactile Systems Technology

Tactile Systems Technology, Inc., a medical technology company, develops and provides medical devices to treat underserved chronic diseases in the United States. It offers Flexitouch Plus system, a pneumatic compression device for the treatment of lymphedema in the home setting; and Entre Plus System, a portable pneumatic compression device for the at-home treatment of venous disorders, such as lymphedema and chronic venous insufficiency, including venous leg ulcers. The company also provides Kylee, a mobile application to help patients learn about lymphedema, track their symptoms, and treatment, as well as to share their progress with their doctor; and AffloVest, a portable high frequency chest wall oscillation vest to treat patients with retained pulmonary secretions resulting from bronchiectasis, cystic fibrosis, and various neuromuscular disorders. Tactile Systems Technology, Inc. was incorporated in 1995 and is headquartered in Minneapolis, Minnesota.

About Alphatec

Alphatec Holdings, Inc., a medical technology company, designs, develops, and advances technologies for the surgical treatment of spinal disorders in the United States and internationally. It manufactures and sells implants and instruments through third-party suppliers. The company offers Alpha InformatiX product platform, including EOS imaging system that provides full-body imaging; VEA alignment mobile application, which leverages EOS technology to more quickly quantify alignment parameters on a mobile device; SafeOp Neural InformatiX System that automates electromyographic and somatosensory evoked potential monitoring; and Valence, an intra-operative system that integrates navigation and robotics into spine procedures, as well as Sigma Prone TransPsoas (PTP) Access and PTP Patient Positioning Systems. It also provides split-blade retractors; Sigma-ALIF Access System, a procedure-specific access system; spinal implants and fixation systems comprising NanoTec surface modifications, Calibrate PSX, and Invictus, as well as various standalone implants for height restoration and stabilization. In addition, the company provides biologics comprising 3D ProFuse Osteoconductive Bioscaffold for ease of handling and better endplate-to-endplate contact; AlphaGRAFT Demineralized Bone Matrix (DBM) comprising demineralized human tissues; AlphaGRAFT DBM Fibers comprising demineralized fibers; AlphaGRAFT Cellular Bone Matrix (CBM), a growth factor-enriched cellular bone matrix; AlphaGRAFT CBM that is delivered in granular, fiber, or structural form; BioCORE Moldable Bioactive Graft, a synthetic mineral-collagen composite matrix that can be molded to fit the bone defect; and Amnioshield Amniotic Tissue Barrier, an allograft for spinal surgical barrier applications. The company sells its products through a network of independent sales agents and direct sales representatives. Alphatec Holdings, Inc. was founded in 1990 and is headquartered in Carlsbad, California.