Stryker (NYSE:SYK) & Nuvectra (NYSE:NVTR) Critical Analysis

Stryker (NYSE:SYK) and Nuvectra (NASDAQ:NVTR) are both medical companies, but which is the better investment? We will contrast the two businesses based on the strength of their profitability, analyst recommendations, earnings, valuation, institutional ownership, risk and dividends.

Profitability

This table compares Stryker and Nuvectra’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Stryker 24.99% 25.98% 11.56%
Nuvectra -99.08% -58.23% -34.01%

Volatility and Risk

Stryker has a beta of 0.81, suggesting that its share price is 19% less volatile than the S&P 500. Comparatively, Nuvectra has a beta of 0.7, suggesting that its share price is 30% less volatile than the S&P 500.

Valuation and Earnings

This table compares Stryker and Nuvectra’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Stryker $13.60 billion 5.92 $3.55 billion $7.31 29.46
Nuvectra $48.83 million 0.66 -$48.13 million ($3.19) -0.56

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

Dividends

Stryker pays an annual dividend of $2.08 per share and has a dividend yield of 1.0%. Nuvectra does not pay a dividend. Stryker pays out 28.5% of its earnings in the form of a dividend.

Analyst Ratings

This is a summary of current recommendations and price targets for Stryker and Nuvectra, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Stryker 0 5 17 0 2.77
Nuvectra 0 0 3 0 3.00

Stryker presently has a consensus target price of $214.39, suggesting a potential downside of 0.43%. Nuvectra has a consensus target price of $10.67, suggesting a potential upside of 495.90%. Given Nuvectra’s stronger consensus rating and higher probable upside, analysts clearly believe Nuvectra is more favorable than Stryker.

Insider & Institutional Ownership

73.0% of Stryker shares are held by institutional investors. Comparatively, 78.1% of Nuvectra shares are held by institutional investors. 7.2% of Stryker shares are held by insiders. Comparatively, 2.9% of Nuvectra shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Summary

Stryker beats Nuvectra on 12 of the 16 factors compared between the two stocks.

Stryker Company Profile

Stryker Corporation operates as a medical technology company. The company operates through three segments: Orthopaedics, MedSurg, and Neurotechnology and Spine. The Orthopaedics segment provides implants for use in hip and knee joint replacements, and trauma and extremities surgeries. The MedSurg segment offers surgical equipment and surgical navigation systems, endoscopic and communications systems, patient handling, emergency medical equipment and intensive care disposable products, reprocessed and remanufactured medical devices, and other medical devices for use in various medical specialties. The Neurotechnology and Spine segment provides neurotechnology products that include products used for minimally invasive endovascular techniques; products for brain and open skull based surgical procedures; orthobiologic and biosurgery products, such as synthetic bone grafts and vertebral augmentation products; and minimally invasive products for the treatment of acute ischemic and hemorrhagic stroke. It also provides spinal implant products comprising cervical, thoracolumbar, and interbody systems for use in spinal injury, deformity, and degenerative therapies. The company sells its products to doctors, hospitals, and other healthcare facilities through company-owned subsidiaries and branches, as well as third-party dealers and distributors in approximately 80 countries. Stryker Corporation was founded in 1941 and is headquartered in Kalamazoo, Michigan.

Nuvectra Company Profile

Nuvectra Corporation, a neurostimulation medical device company, develops and commercializes neurostimulation technology platform for the treatment of various disorders in neuroscience and clinical markets. The company offers Algovita, a spinal cord stimulation system for the treatment of chronic intractable pain of the trunk and limbs. It is also developing Virtis, a sacral neuromodulation (SNM) system for the treatment of chronic urinary retention and overactive bladder; and technologies to support other indications, including SNM for the treatment of overactive bladder and deep brain stimulation to treat Parkinson's disease. The company serves hospitals, surgery centers, and medical facilities through a direct sales force and third-party distributors in the United States and Europe. Nuvectra Corporation was founded in 2008 and is headquartered in Plano, Texas.

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