Financial Analysis: Masimo Corporation (NASDAQ:MASI) & Tactile Systems Technology (TCMD)

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

Analyst Recommendations

This is a breakdown of current ratings for Masimo Corporation and Tactile Systems Technology, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Masimo Corporation 0 3 3 0 2.50
Tactile Systems Technology 0 0 4 0 3.00

Masimo Corporation currently has a consensus target price of $96.25, suggesting a potential upside of 15.16%. Tactile Systems Technology has a consensus target price of $33.00, suggesting a potential upside of 7.92%. Given Masimo Corporation’s higher possible upside, research analysts plainly believe Masimo Corporation is more favorable than Tactile Systems Technology.

Valuation & Earnings

This table compares Masimo Corporation and Tactile Systems Technology’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Masimo Corporation $730.06 million 5.95 $182.11 million $6.14 13.61
Tactile Systems Technology $97.23 million 5.33 $3.09 million $0.25 122.31

Masimo Corporation has higher revenue and earnings than Tactile Systems Technology. Masimo Corporation 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.

Insider and Institutional Ownership

84.4% of Masimo Corporation shares are owned by institutional investors. Comparatively, 34.7% of Tactile Systems Technology shares are owned by institutional investors. 16.6% of Masimo Corporation shares are owned by company insiders. Comparatively, 49.9% of Tactile Systems Technology shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Profitability

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

Net Margins Return on Equity Return on Assets
Masimo Corporation 45.90% 23.45% 16.22%
Tactile Systems Technology 4.97% 3.05% 2.54%

Summary

Masimo Corporation beats Tactile Systems Technology on 9 of the 13 factors compared between the two stocks.

Masimo Corporation Company Profile

Masimo Corporation is a medical technology company that develops, manufactures and markets a range of non-invasive patient monitoring technologies. The Company’s business is Measure-through Motion and Low Perfusion pulse oximetry monitoring, known as Masimo Signal Extraction Technology (SET) pulse oximetry. Its product offerings include non-invasive monitoring of blood constituents with an optical signature, optical organ oximetry monitoring, electrical, brain function monitoring, acoustic respiration monitoring and exhaled gas monitoring. In addition, the Company has developed the Root patient monitoring and connectivity platform, the Radical-7 bedside and portable patient monitor, and the Radius-7 wearable wireless patient monitor. It offers Patient SafetyNet remote patient surveillance monitoring system, which allows patients to be monitored through a personal computer-based monitor or by care providers through their pagers, voice-over-Internet Protocol (IP) phones or smartphones.

Tactile Systems Technology Company Profile

Tactile Systems Technology, Inc. is a medical technology company that develops and provides medical devices for the treatment of chronic diseases at home. The Company is a manufacturer and distributor of the Flexitouch and Entre Systems, medical devices that help control symptoms of lymphedema, a chronic and progressive medical condition that is often an unintended consequence of cancer treatment, and the ACTitouch System, a medical device used to treat venous leg ulcers and chronic venous insufficiency. Its products deliver long-term treatment of chronic diseases. The Company provides its products for use in the home and sells them through vascular, wound and lymphedema clinics throughout the United States. The Company offers a platform to deliver at-home healthcare solutions throughout the United States. Its initial area of therapeutic focus is vascular disease, with a focus on advancing the care in treating lymphedema and chronic venous insufficiency.

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