Head-To-Head Analysis: K2M Group Holdings (KTWO) & NeuroMetrix (NURO)

K2M Group Holdings (NASDAQ: KTWO) and NeuroMetrix (NASDAQ:NURO) are both small-cap medical companies, but which is the superior business? We will contrast the two businesses based on the strength of their dividends, earnings, analyst recommendations, institutional ownership, risk, profitability and valuation.

Institutional & Insider Ownership

98.7% of K2M Group Holdings shares are owned by institutional investors. Comparatively, 6.3% of NeuroMetrix shares are owned by institutional investors. 5.8% of K2M Group Holdings shares are owned by insiders. Comparatively, 4.4% of NeuroMetrix shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock will outperform the market over the long term.

Profitability

This table compares K2M Group Holdings and NeuroMetrix’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
K2M Group Holdings -16.22% -16.02% -10.73%
NeuroMetrix -80.57% -232.71% -140.16%

Volatility & Risk

K2M Group Holdings has a beta of 1.38, meaning that its share price is 38% more volatile than the S&P 500. Comparatively, NeuroMetrix has a beta of 0.34, meaning that its share price is 66% less volatile than the S&P 500.

Analyst Recommendations

This is a summary of recent ratings and price targets for K2M Group Holdings and NeuroMetrix, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
K2M Group Holdings 0 0 8 1 3.11
NeuroMetrix 0 0 1 0 3.00

K2M Group Holdings presently has a consensus price target of $25.13, indicating a potential upside of 35.23%. NeuroMetrix has a consensus price target of $3.00, indicating a potential upside of 68.54%. Given NeuroMetrix’s higher possible upside, analysts plainly believe NeuroMetrix is more favorable than K2M Group Holdings.

Valuation and Earnings

This table compares K2M Group Holdings and NeuroMetrix’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio NetIncome Earnings Per Share Price/Earnings Ratio
K2M Group Holdings $236.63 million 3.40 -$41.66 million ($0.97) -19.15
NeuroMetrix $12.03 million 0.35 -$14.91 million ($17.04) -0.10

NeuroMetrix has higher revenue, but lower earnings than K2M Group Holdings. K2M Group Holdings is trading at a lower price-to-earnings ratio than NeuroMetrix, indicating that it is currently the more affordable of the two stocks.

Summary

K2M Group Holdings beats NeuroMetrix on 12 of the 14 factors compared between the two stocks.

K2M Group Holdings Company Profile

K2M Group Holdings, Inc. is a medical device company focused on designing, developing and commercializing spine and minimally invasive technologies and techniques. The Company’s solutions are focused on achieving three-dimensional Total Body Balance. Its spine products are used by spine surgeons to treat spinal pathologies, such as deformity (primarily scoliosis), trauma and tumor. Its products consist of implants, disposables and instruments, which are marketed and sold primarily to hospitals for use by spine surgeons. As of December 31, 2016, its product portfolio consisted of 83 product lines that are used in complex spine, minimally invasive surgery (MIS) and degenerative surgeries. Its technologies include EVEREST, MESA, Rail 4D, Quicket Deformity, CASCADIA, CAPRI, SERENGETI, RAVINE and tifix. Its degenerative spine technologies are used to treat degenerative spine disorders and include products, such as cervical, thoracic and lumbar spinal fusion devices and interbody devices.

NeuroMetrix Company Profile

NeuroMetrix, Inc. is a healthcare company combining bioelectrical and digital medicine to address chronic health conditions, including chronic pain, sleep disorders and diabetes. The Company is engaged in the sale of medical equipment, and consumables and accessories. It has two principal product lines: Wearable neuro-stimulation therapeutic devices and Point-of-care neuropathy diagnostic tests. Its products include ADVANCE NCS/EMG System (the ADVANCE System), Quell, SENSUS and DPNCheck. Quell is a wearable device for relief of chronic intractable pain, such as nerve pain due to diabetes and lower back problems. The SENSUS pain therapy device, the technological predecessor to Quell, is a prescription neuro-stimulation device based on transcutaneous electrical nerve stimulation (TENS) for relief of chronic, intractable pain. DPNCheck is a quantitative nerve conduction test. ADVANCE System is a platform for the performance of traditional nerve conduction studies.

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