Critical Comparison: Varian Medical Systems (VAR) and Abaxis (NASDAQ:ABAX)

Varian Medical Systems (NYSE: VAR) and Abaxis (NASDAQ:ABAX) are both medical companies, but which is the better stock? We will compare the two companies based on the strength of their risk, profitability, earnings, institutional ownership, analyst recommendations, valuation and dividends.

Profitability

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This table compares Varian Medical Systems and Abaxis’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Varian Medical Systems 4.27% 27.13% 11.95%
Abaxis 10.51% 10.09% 8.69%

Earnings & Valuation

This table compares Varian Medical Systems and Abaxis’ revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Varian Medical Systems $2.67 billion 4.03 $249.60 million $3.60 32.68
Abaxis $227.22 million 6.88 $32.71 million $1.27 54.21

Varian Medical Systems has higher revenue and earnings than Abaxis. Varian Medical Systems is trading at a lower price-to-earnings ratio than Abaxis, indicating that it is currently the more affordable of the two stocks.

Dividends

Abaxis pays an annual dividend of $0.64 per share and has a dividend yield of 0.9%. Varian Medical Systems does not pay a dividend. Abaxis pays out 50.4% of its earnings in the form of a dividend.

Insider and Institutional Ownership

99.2% of Varian Medical Systems shares are owned by institutional investors. Comparatively, 99.4% of Abaxis shares are owned by institutional investors. 0.8% of Varian Medical Systems shares are owned by insiders. Comparatively, 4.3% of Abaxis shares are owned 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.

Volatility & Risk

Varian Medical Systems has a beta of 0.82, suggesting that its share price is 18% less volatile than the S&P 500. Comparatively, Abaxis has a beta of 1.16, suggesting that its share price is 16% more volatile than the S&P 500.

Analyst Ratings

This is a breakdown of recent ratings and target prices for Varian Medical Systems and Abaxis, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Varian Medical Systems 3 5 3 0 2.00
Abaxis 1 4 1 0 2.00

Varian Medical Systems currently has a consensus target price of $108.44, indicating a potential downside of 7.82%. Abaxis has a consensus target price of $56.63, indicating a potential downside of 17.76%. Given Varian Medical Systems’ higher possible upside, analysts plainly believe Varian Medical Systems is more favorable than Abaxis.

Summary

Varian Medical Systems beats Abaxis on 8 of the 15 factors compared between the two stocks.

Varian Medical Systems Company Profile

Varian Medical Systems, Inc. designs, manufactures, sells, and services medical devices and software products for treating cancer and other medical conditions worldwide. It operates through two segments, Oncology Systems and Varian Particle Therapy. The Oncology Systems segment provides hardware and software products for treating cancer with radiotherapy, fixed field intensity-modulated radiation therapy, image-guided radiation therapy, volumetric modulated arc therapy, stereotactic radiosurgery, stereotactic body radiotherapy, and brachytherapy. Its products include linear accelerators, brachytherapy afterloaders, treatment simulation and verification equipment, and accessories; and information management, treatment planning, image processing, clinical knowledge exchange, patient care management, decision-making support, and practice management software. This segment serves university research and community hospitals, private and governmental institutions, healthcare agencies, physicians' offices, oncology practices, radiotherapy centers, and cancer care clinics. The Varian Particle Therapy segment develops, designs, manufactures, sells, and services products and systems for delivering proton therapy for the treatment of cancer. Varian Medical Systems, Inc. has a strategic partnership with Siemens AG to co-develop new imaging and treatment solutions. The company was formerly known as Varian Associates, Inc. and changed its name to Varian Medical Systems, Inc. in April 1999. Varian Medical Systems, Inc. was founded in 1948 and is headquartered in Palo Alto, California.

Abaxis Company Profile

Abaxis, Inc. is a developer, manufacturer and marketer of portable blood analysis systems that are used in medical specialties in human or veterinary patient care to provide clinicians with blood constituent measurements. The Company markets and sells its products around the world through independent distributors and direct sales force. The Company’s segments are the medical market and the veterinary market. The Company’s medical market products include Piccolo chemistry analyzers and consumable products. The Company develops, manufactures and sells the Piccolo Xpress chemistry analyzer for use in human patient care to provide clinicians with blood constituent measurements. The Company’s veterinary market product offerings include VetScan chemistry analyzers and veterinary reagent discs, VetScan hematology instruments and related reagent kits, VetScan VSpro specialty analyzers and related consumables, VetScan i-STAT analyzers and related consumables and VetScan rapid tests.

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