Alere (NYSE: ALR) and ABAXIS (NASDAQ:ABAX) are both medical companies, but which is the superior investment? We will contrast the two companies based on the strength of their risk, institutional ownership, valuation, profitability, analyst recommendations, earnings and dividends.

Dividends

ABAXIS pays an annual dividend of $0.56 per share and has a dividend yield of 1.2%. Alere does not pay a dividend. ABAXIS pays out 39.7% of its earnings in the form of a dividend.

Analyst Recommendations

This is a summary of recent ratings and recommmendations for Alere and ABAXIS, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Alere 0 5 0 0 2.00
ABAXIS 1 4 1 0 2.00

Alere currently has a consensus target price of $48.00, indicating a potential downside of 3.56%. ABAXIS has a consensus target price of $48.63, indicating a potential upside of 7.01%. Given ABAXIS’s higher probable upside, analysts plainly believe ABAXIS is more favorable than Alere.

Volatility & Risk

Alere has a beta of 0.21, suggesting that its stock price is 79% less volatile than the S&P 500. Comparatively, ABAXIS has a beta of 0.81, suggesting that its stock price is 19% less volatile than the S&P 500.

Valuation & Earnings

This table compares Alere and ABAXIS’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Alere $2.32 billion 1.88 $261.20 million ($2.45) -20.31
ABAXIS $227.78 million 4.53 $49.81 million $1.41 32.23

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

Profitability

This table compares Alere and ABAXIS’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Alere -10.73% 4.54% 1.01%
ABAXIS 14.12% 10.85% 9.44%

Insider & Institutional Ownership

88.8% of Alere shares are held by institutional investors. Comparatively, 97.3% of ABAXIS shares are held by institutional investors. 3.7% of Alere shares are held by insiders. Comparatively, 4.1% of ABAXIS shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Summary

ABAXIS beats Alere on 12 of the 15 factors compared between the two stocks.

Alere Company Profile

Alere Inc. is a provider of health information through diagnostic tests. The Company’s segments include professional diagnostics, consumer diagnostics, and corporate and other. The professional diagnostics segment includes an array of diagnostic test products and other in vitro diagnostic tests marketed to medical professionals and laboratories for detection of diseases and conditions within its areas of focus. The consumer diagnostics segment consists primarily of manufacturing operations related to its role as the exclusive manufacturer of products for SPD Swiss Precision Diagnostics (SPD), its joint venture with The Procter & Gamble Company (P&G). The Company’s professional diagnostic solutions allow patients and their healthcare providers to work together to manage patients’ conditions over the continuum of care, from the hospital to home. The Company offers lines of drugs-of-abuse tests, reagent systems and laboratory testing options.

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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