Critical Contrast: Nephros (NASDAQ:NEPH) & Modular Medical (NASDAQ:MODD)

Modular Medical (NASDAQ:MODD) and Nephros (NASDAQ:NEPH) are both small-cap medical companies, but which is the superior stock? We will contrast the two companies based on the strength of their dividends, analyst recommendations, institutional ownership, valuation, earnings, profitability and risk.

Profitability

This table compares Modular Medical and Nephros’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Modular Medical	N/A	-286.34%	-216.26%
Nephros	4.06%	7.66%	5.86%

Volatility and Risk

Modular Medical has a beta of 0.32, indicating that its share price is 68% less volatile than the S&P 500. Comparatively, Nephros has a beta of 1.49, indicating that its share price is 49% more volatile than the S&P 500.

Analyst Recommendations

This is a summary of recent ratings and recommmendations for Modular Medical and Nephros, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Modular Medical	1	0	0	0	1.00
Nephros	0	1	1	0	2.50

Nephros has a consensus price target of $6.00, indicating a potential upside of 71.43%. Given Nephros’ stronger consensus rating and higher possible upside, analysts plainly believe Nephros is more favorable than Modular Medical.

Insider and Institutional Ownership

27.5% of Modular Medical shares are owned by institutional investors. Comparatively, 41.1% of Nephros shares are owned by institutional investors. 7.1% of Modular Medical shares are owned by insiders. Comparatively, 6.7% of Nephros shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Earnings and Valuation

This table compares Modular Medical and Nephros”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Modular Medical	N/A	N/A	-$28.24 million	($14.71)	-0.28
Nephros	$18.79 million	2.02	$1.19 million	$0.07	50.00

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

Summary

Nephros beats Modular Medical on 12 of the 13 factors compared between the two stocks.

About Modular Medical

Modular Medical, Inc. operates as a medical device company. It focuses on the design, development, and commercialization of insulin pumps. It offers MODD1, a two-part patch pump for type-1 and type-2 diabetes. The company is headquartered in San Diego, California.

About Nephros

Nephros, Inc., a commercial-stage company, develops and sells water solutions to the medical and commercial markets in the United States. It offers ultrafiltration products that are used in dialysis centers for the removal of biological contaminants from water and bicarbonate concentrate; and in hospitals for the prevention of infection from waterborne pathogens, such as legionella and pseudomonas, as well as in military and outdoor recreation, commercial, and other healthcare facilities. The company also manufactures and sells water filters that enhance the taste and odor of water, as well as reduce biofilm, cysts, particulates, and scale build-up in downstream equipment. It markets its products to food service, hospitality, convenience store, and health care markets, as well as medical institutions. The company was incorporated in 1997 and is headquartered in South Orange, New Jersey.