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

Institutional and Insider Ownership

59.0% of Digirad Corporation shares are owned by institutional investors. 7.5% of GenMark Diagnostics shares are owned by company insiders. Comparatively, 11.9% of Digirad Corporation shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Analyst Ratings

This is a summary of recent recommendations and price targets for GenMark Diagnostics and Digirad Corporation, as provided by MarketBeat.com.

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

GenMark Diagnostics currently has a consensus target price of $14.40, suggesting a potential upside of 50.63%. Digirad Corporation has a consensus target price of $6.40, suggesting a potential upside of 88.24%. Given Digirad Corporation’s higher possible upside, analysts clearly believe Digirad Corporation is more favorable than GenMark Diagnostics.

Earnings & Valuation

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

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
GenMark Diagnostics $50.59 million 10.33 -$49.93 million ($1.21) -7.90
Digirad Corporation $121.09 million 0.56 $11.54 million ($0.15) -22.67

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.

Profitability

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

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

Dividends

Digirad Corporation pays an annual dividend of $0.22 per share and has a dividend yield of 6.5%. GenMark Diagnostics does not pay a dividend. Digirad Corporation pays out -146.7% of its earnings in the form of a dividend.

Volatility and Risk

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

Summary

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

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.

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.

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