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Are WMGI & ARAY Neck and Neck? Let's Take a Closer Look
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Medical Instrument companies Wright Medical Group N.V. and Accuray Incorporated (ARAY - Free Report) are two solid contenders in the U.S. MedTech space, which is expected to reach a worth of $409.5 billion by 2023 at a CAGR of 4.5%. Notably, these companies ride on R&D innovation and the 2.3% Medical Device tax abatement announced earlier this year.
As these companies have similar business models, it often becomes difficult to decide which investment option is better. Making things more difficult, the scales apparently look balanced as both the companies carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
However, we make a detailed analysis of the companies’ fundamentals to determine which has a slight edge over the other.
Netherlands-based Wright Medical specializes in extremities and biologics products. Based in California, Accuray designs, develops and sells radiosurgery and radiation therapy systems.
Price Performance
In the past year, Wright Medical’s shares have gained 21.3% against Accuray’s decline of 6.8%. The Medical Instruments industry has rallied 15.4% in the same time frame. Meanwhile, the S&P 500 index has returned 5.8%.
Which Way Are Estimates Headed?
Earnings
The Zacks Consensus Estimate for Wright Medical’s current-quarter earnings per share stands at 6 cents, which shows an improvement of a whopping 100% over the last 60 days. The same for Accuray is projected at a loss of 6 cents.
The Zacks Consensus Estimate for Wright Medical’s current-quarter revenues is pegged at $234.2 million, showing growth of 7.6% from the previous year. The same for Accuray is pegged at $104 million, reflecting a rise of 4.2%.
Clearly, Wright Medical has a competitive advantage over Accuray with respect to current-year earnings and revenue estimates.
How Does Valuation Look?
Wright Medical stock currently looks overvalued when compared with Accuray and its industry.
Wright Medical currently trades at a price-to-sales ratio, i.e., P/S ratio (TTM basis) of 4.1 compared with Accuray’s ratio of 1. Meanwhile, the industry’s ratio stands at 3.22.
Recent Financial Results
Wright Medical
In the recently reported third quarter of 2018, the company posted adjusted loss of 9 cents, narrower than the Zacks Consensus Estimate of a loss of 15 cents. Notably, the company had reported loss of 16 cents in the year-ago quarter.
Wright Medical’s third-quarter revenues came in at $194.1 million, which beat the Zacks Consensus Estimate by 4.2%. Revenues improved 13.8% year over year.
Resultantly, Wright Medical has raised its 2018 outlook.
Accuray
In the recently reported first quarter of fiscal 2019, the company posted adjusted loss of 7 cents per share, wider than the Zacks Consensus Estimate of a loss of 6 cents. Notably, Accuray had reported a loss of 7 cents in the year-earlier quarter.
Net revenues totaled $95.83 million, marginally beating the Zacks Consensus Estimate of $95 million. On a year-over-year basis, revenues climbed 5.4% in the quarter.
The company has retained its revenue guidance.
Again, Wright Medical scores higher than Accuray.
To Wrap It Up
Our comparative analysis indicates that Wright Medical is better-positioned than Accuray, considering current-year earnings and revenues projections and price performance. Although Wright Medical looks expensive compared to Accuray, the long-term prospects of the company hold promise.
Other Key Picks
Other top-ranked stocks in the broader medical space are Stryker Corporation (SYK - Free Report) and Surmodics, Inc. (SRDX - Free Report) .
Stryker has a long-term expected earnings growth rate of 10% and a Zacks Rank #2.
Surmodics’ long-term earnings growth rate is projected at 10%. The stock carries a Zacks Rank #2.
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Image: Bigstock
Are WMGI & ARAY Neck and Neck? Let's Take a Closer Look
Medical Instrument companies Wright Medical Group N.V. and Accuray Incorporated (ARAY - Free Report) are two solid contenders in the U.S. MedTech space, which is expected to reach a worth of $409.5 billion by 2023 at a CAGR of 4.5%. Notably, these companies ride on R&D innovation and the 2.3% Medical Device tax abatement announced earlier this year.
As these companies have similar business models, it often becomes difficult to decide which investment option is better. Making things more difficult, the scales apparently look balanced as both the companies carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
However, we make a detailed analysis of the companies’ fundamentals to determine which has a slight edge over the other.
Netherlands-based Wright Medical specializes in extremities and biologics products. Based in California, Accuray designs, develops and sells radiosurgery and radiation therapy systems.
Price Performance
In the past year, Wright Medical’s shares have gained 21.3% against Accuray’s decline of 6.8%. The Medical Instruments industry has rallied 15.4% in the same time frame. Meanwhile, the S&P 500 index has returned 5.8%.
Which Way Are Estimates Headed?
Earnings
The Zacks Consensus Estimate for Wright Medical’s current-quarter earnings per share stands at 6 cents, which shows an improvement of a whopping 100% over the last 60 days. The same for Accuray is projected at a loss of 6 cents.
Wright Medical Group N.V. Price and Consensus
Wright Medical Group N.V. Price and Consensus | Wright Medical Group N.V. Quote
Sales
The Zacks Consensus Estimate for Wright Medical’s current-quarter revenues is pegged at $234.2 million, showing growth of 7.6% from the previous year. The same for Accuray is pegged at $104 million, reflecting a rise of 4.2%.
Accuray Incorporated Price and Consensus
Accuray Incorporated Price and Consensus | Accuray Incorporated Quote
Clearly, Wright Medical has a competitive advantage over Accuray with respect to current-year earnings and revenue estimates.
How Does Valuation Look?
Wright Medical stock currently looks overvalued when compared with Accuray and its industry.
Wright Medical currently trades at a price-to-sales ratio, i.e., P/S ratio (TTM basis) of 4.1 compared with Accuray’s ratio of 1. Meanwhile, the industry’s ratio stands at 3.22.
Recent Financial Results
Wright Medical
In the recently reported third quarter of 2018, the company posted adjusted loss of 9 cents, narrower than the Zacks Consensus Estimate of a loss of 15 cents. Notably, the company had reported loss of 16 cents in the year-ago quarter.
Wright Medical’s third-quarter revenues came in at $194.1 million, which beat the Zacks Consensus Estimate by 4.2%. Revenues improved 13.8% year over year.
Resultantly, Wright Medical has raised its 2018 outlook.
Accuray
In the recently reported first quarter of fiscal 2019, the company posted adjusted loss of 7 cents per share, wider than the Zacks Consensus Estimate of a loss of 6 cents. Notably, Accuray had reported a loss of 7 cents in the year-earlier quarter.
Net revenues totaled $95.83 million, marginally beating the Zacks Consensus Estimate of $95 million. On a year-over-year basis, revenues climbed 5.4% in the quarter.
The company has retained its revenue guidance.
Again, Wright Medical scores higher than Accuray.
To Wrap It Up
Our comparative analysis indicates that Wright Medical is better-positioned than Accuray, considering current-year earnings and revenues projections and price performance. Although Wright Medical looks expensive compared to Accuray, the long-term prospects of the company hold promise.
Other Key Picks
Other top-ranked stocks in the broader medical space are Stryker Corporation (SYK - Free Report) and Surmodics, Inc. (SRDX - Free Report) .
Stryker has a long-term expected earnings growth rate of 10% and a Zacks Rank #2.
Surmodics’ long-term earnings growth rate is projected at 10%. The stock carries a Zacks Rank #2.
Looking for Stocks with Skyrocketing Upside?
Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.
Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.
See the pot trades we're targeting>>