Varian Medical Systems (NYSE: VAR) and Cerner Corporation (NASDAQ:CERN) are both mid-cap medical companies, but which is the superior business? We will compare the two companies based on the strength of their valuation, analyst recommendations, risk, dividends, earnings, institutional ownership and profitability.

Risk and Volatility

Varian Medical Systems has a beta of 0.56, indicating that its stock price is 44% less volatile than the S&P 500. Comparatively, Cerner Corporation has a beta of 0.95, indicating that its stock price is 5% less volatile than the S&P 500.

Insider and Institutional Ownership

99.2% of Varian Medical Systems shares are owned by institutional investors. Comparatively, 78.9% of Cerner Corporation shares are owned by institutional investors. 0.9% of Varian Medical Systems shares are owned by company insiders. Comparatively, 13.2% of Cerner Corporation shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Profitability

This table compares Varian Medical Systems and Cerner Corporation’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Varian Medical Systems 8.85% 23.68% 10.74%
Cerner Corporation 13.37% 18.03% 12.89%

Analyst Recommendations

This is a breakdown of current recommendations for Varian Medical Systems and Cerner Corporation, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Varian Medical Systems 2 7 1 0 1.90
Cerner Corporation 0 12 9 0 2.43

Varian Medical Systems currently has a consensus price target of $97.83, indicating a potential downside of 6.10%. Cerner Corporation has a consensus price target of $68.67, indicating a potential upside of 1.70%. Given Cerner Corporation’s stronger consensus rating and higher probable upside, analysts clearly believe Cerner Corporation is more favorable than Varian Medical Systems.

Earnings & Valuation

This table compares Varian Medical Systems and Cerner Corporation’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Varian Medical Systems $3.27 billion 2.92 $643.00 million $2.69 38.73
Cerner Corporation $4.90 billion 4.57 $1.37 billion $2.01 33.59

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

Summary

Cerner Corporation beats Varian Medical Systems on 11 of the 14 factors compared between the two stocks.

About Varian Medical Systems

Varian Medical Systems, Inc. is a manufacturer of medical devices and software for treating cancer and other medical conditions with radiotherapy, radiosurgery, proton therapy and brachytherapy medical devices and software for treating cancer and other medical conditions with radiotherapy, radiosurgery, proton therapy and brachytherapy. The Company also has Varian Particle Therapy (VPT) and the operations of the Ginzton Technology Center (GTC). Its VPT business develops, designs, manufactures, sells and services products and systems for delivering proton therapy, another form of external beam radiotherapy using proton beams for the treatment of cancer. Its ProBeam system is capable of delivering intensity modulated proton therapy (IMPT) using pencil beam scanning technology. Its ProBeam Compact is a single room proton therapy product.

About Cerner Corporation

Cerner Corporation (Cerner) is a supplier of healthcare information technology (HCIT). The Company offers a range of intelligent solutions and services that support the clinical, financial and operational needs of organizations of all sizes. The Company’s segments include Domestic and Global. The Domestic segment includes revenue contributions and expenditures associated with business activity in the United States. The Global segment includes revenue contributions and expenditures linked to business activity in Aruba, Australia, Austria, the Bahamas, Belgium, Bermuda, Brazil, Canada, Cayman Islands, Chile, Denmark, Egypt, England, Finland, France, Germany, Guam, India, Ireland, Kuwait, Luxembourg, Malaysia, Mexico, the Netherlands, Norway, Portugal, Qatar, Romania, Saudi Arabia, Singapore, Slovakia, Spain, Sweden, Switzerland and the United Arab Emirates. The Company’s solutions are offered on the unified Cerner Millennium architecture and on the HealtheIntent cloud-based platform.

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