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

Insider and Institutional Ownership

53.1% of Digirad Corporation shares are owned by institutional investors. Comparatively, 68.3% of Pacific Biosciences of California shares are owned by institutional investors. 11.9% of Digirad Corporation shares are owned by company insiders. Comparatively, 17.8% of Pacific Biosciences of California shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Risk and Volatility

Digirad Corporation has a beta of 1.91, suggesting that its share price is 91% more volatile than the S&P 500. Comparatively, Pacific Biosciences of California has a beta of 2.1, suggesting that its share price is 110% more volatile than the S&P 500.

Dividends

Digirad Corporation pays an annual dividend of $0.22 per share and has a dividend yield of 9.6%. Pacific Biosciences of California does not pay a dividend. Digirad Corporation pays out -146.7% of its earnings in the form of a dividend.

Analyst Ratings

This is a summary of current ratings and recommmendations for Digirad Corporation and Pacific Biosciences of California, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Digirad Corporation 0 0 1 0 3.00
Pacific Biosciences of California 0 2 1 0 2.33

Digirad Corporation presently has a consensus price target of $6.00, suggesting a potential upside of 160.87%. Pacific Biosciences of California has a consensus price target of $8.93, suggesting a potential upside of 106.31%. Given Digirad Corporation’s stronger consensus rating and higher possible upside, equities research analysts plainly believe Digirad Corporation is more favorable than Pacific Biosciences of California.

Profitability

This table compares Digirad Corporation and Pacific Biosciences of California’s 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%
Pacific Biosciences of California -89.67% -93.31% -57.10%

Earnings and Valuation

This table compares Digirad Corporation and Pacific Biosciences of California’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Digirad Corporation $121.09 million 0.38 $11.54 million ($0.15) -15.33
Pacific Biosciences of California $95.83 million 5.22 -$75.40 million ($0.92) -4.71

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

Summary

Digirad Corporation beats Pacific Biosciences of California on 10 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 Pacific Biosciences of California

Pacific Biosciences of California, Inc. designs, develops and manufactures sequencing systems to help scientists resolve genetically complex problems. The Company is engaged in the development, manufacturing and marketing of an integrated platform for genetic analysis. Its Single Molecule, Real-Time (SMRT) technology enables single molecule, real-time detection of biological processes. It offers The SMRT Cell, Phospholinked nucleotides and The PacBio RS II and Sequel instruments. Its SMRT technology enables the observation of deoxyribonucleic acid (DNA) synthesis as it occurs in real-time by harnessing the natural process of DNA replication, which is actuated by the DNA polymerase. Its phospholinked nucleotides have a fluorescent dye attached to the phosphate chain of the nucleotide rather than to the base. The PacBio RS II and Sequel instruments include optics, automated liquid handling, a touchscreen control interface and computational hardware and software.

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