Digirad Corporation (NASDAQ: DRAD) and GenMark Diagnostics (NASDAQ:GNMK) are both small-cap medical companies, but which is the better investment? We will contrast the two companies based on the strength of their analyst recommendations, risk, institutional ownership, dividends, profitability, earnings and valuation.

Profitability

This table compares Digirad Corporation and GenMark Diagnostics’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Digirad Corporation -2.60% 8.58% 5.30%
GenMark Diagnostics -111.96% -109.89% -60.26%

Volatility and Risk

Digirad Corporation has a beta of 1.91, meaning that its stock price is 91% more volatile than the S&P 500. Comparatively, GenMark Diagnostics has a beta of 0.91, meaning that its stock price is 9% less volatile than the S&P 500.

Institutional and Insider Ownership

53.1% of Digirad Corporation shares are owned by institutional investors. 11.9% of Digirad Corporation shares are owned by insiders. Comparatively, 7.5% of GenMark Diagnostics shares are owned by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.

Dividends

Digirad Corporation pays an annual dividend of $0.22 per share and has a dividend yield of 8.5%. GenMark Diagnostics does not pay a dividend. Digirad Corporation pays out -146.7% of its earnings in the form of a dividend.

Earnings & Valuation

This table compares Digirad Corporation and GenMark Diagnostics’ revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Digirad Corporation $121.09 million 0.43 $11.54 million ($0.15) -17.33
GenMark Diagnostics $50.59 million 9.61 -$49.93 million ($1.21) -7.35

Digirad Corporation has higher revenue and earnings than GenMark Diagnostics. Digirad Corporation is trading at a lower price-to-earnings ratio than GenMark Diagnostics, indicating that it is currently the more affordable of the two stocks.

Analyst Ratings

This is a summary of recent ratings and target prices for Digirad Corporation and GenMark Diagnostics, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Digirad Corporation 0 0 1 0 3.00
GenMark Diagnostics 0 0 5 0 3.00

Digirad Corporation presently has a consensus price target of $6.00, indicating a potential upside of 130.77%. GenMark Diagnostics has a consensus price target of $14.40, indicating a potential upside of 61.98%. Given Digirad Corporation’s higher probable upside, equities analysts clearly believe Digirad Corporation is more favorable than GenMark Diagnostics.

Summary

Digirad Corporation beats GenMark Diagnostics on 12 of the 14 factors compared between the two stocks.

About Digirad Corporation

Digirad Corporation provides healthcare solutions. The Company’s segments include Diagnostic Services, Mobile Healthcare, Diagnostic Imaging and Medical Device Sales and Services. Through Diagnostic Services, the Company offers an imaging services program as an alternative to purchasing equipment or outsourcing the procedures to another physician or imaging center. Through Mobile Healthcare segment, the Company provides contract sales services and diagnostic imaging services. Through Diagnostic Imaging segment, the Company sells its internally developed solid-state gamma camera imaging systems and camera maintenance contracts. Through Medical Device Sales and Services segment, the Company provides contract sales services, as well as warranty and post-warranty services, under contract with Philips Healthcare within a defined region in the upper Midwest region of the United States.

About GenMark Diagnostics

GenMark Diagnostics, Inc. is a molecular diagnostics company. The Company is focused on developing and commercializing multiplex molecular tests that aid in the diagnosis of complex medical conditions. It develops and commercializes multiplex molecular tests based on its eSensor electrochemical detection technology. It offers four Food and Drug Administration (FDA)-cleared diagnostic tests which run on its XT-8 instrument; its Respiratory Viral Panel; its Cystic Fibrosis Genotyping Test; its Warfarin Sensitivity Test, and its Thrombophilia Risk Test. It also offers a Hepatitis C (HCV) genotyping test and associated custom manufactured reagents, as well as a 2C19 Genotyping Test, versions of which are available for use with its XT-8 instrument for research use only (RUO). Its XT-8 and ePlex test cartridges utilize the combination of distinct electrodes and multiple signal probes to detect dozens of target biomarkers from a single sample, thereby enabling highly multiplexed testing.

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