Novadaq Technologies (NASDAQ: NVDQ) and NxStage Medical (NASDAQ:NXTM) are both small-cap medical companies, but which is the superior stock? We will compare the two companies based on the strength of their analyst recommendations, risk, dividends, institutional ownership, earnings, profitability and valuation.

Volatility & Risk

Novadaq Technologies has a beta of 0.71, suggesting that its share price is 29% less volatile than the S&P 500. Comparatively, NxStage Medical has a beta of 0.08, suggesting that its share price is 92% less volatile than the S&P 500.

Institutional and Insider Ownership

88.8% of Novadaq Technologies shares are held by institutional investors. Comparatively, 91.1% of NxStage Medical shares are held by institutional investors. 4.7% of NxStage Medical shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Profitability

This table compares Novadaq Technologies and NxStage Medical’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Novadaq Technologies -71.97% -49.93% -41.47%
NxStage Medical -1.33% -2.43% -1.56%

Valuation and Earnings

This table compares Novadaq Technologies and NxStage Medical’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Novadaq Technologies $83.42 million 8.07 -$47.39 million ($1.04) -11.19
NxStage Medical $378.01 million 5.08 $14.26 million ($0.07) -417.43

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

Analyst Recommendations

This is a summary of recent ratings and recommmendations for Novadaq Technologies and NxStage Medical, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Novadaq Technologies 0 11 2 0 2.15
NxStage Medical 0 7 0 0 2.00

Novadaq Technologies presently has a consensus target price of $11.86, suggesting a potential upside of 1.87%. NxStage Medical has a consensus target price of $29.83, suggesting a potential upside of 2.10%. Given NxStage Medical’s higher probable upside, analysts clearly believe NxStage Medical is more favorable than Novadaq Technologies.

Summary

NxStage Medical beats Novadaq Technologies on 9 of the 13 factors compared between the two stocks.

Novadaq Technologies Company Profile

NOVADAQ Technologies Inc. is a medical device company. The Company primarily develops, manufactures and markets real-time fluorescence imaging products that are designed for use by surgeons in the operating room and other clinical settings where open and minimally invasive surgery or interventional procedures are performed. The Company’s SPY fluorescence imaging technology platform (SPY Fluorescence Imaging) provides clinically relevant anatomic and physiologic images of blood flow in vessels and micro-vessels during a range of surgical and outpatient procedures performed in the operating room or clinic. The SPY Fluorescence Imaging platform can be used to develop imaging devices specifically designed to meet the needs of different surgeons and other healthcare providers and the specialty procedures they perform. SPY images enable physicians treating life-threatening illnesses, such as breast, head and neck, colon, complex hernias, diabetes and certain cardiovascular diseases.

NxStage Medical Company Profile

NxStage Medical, Inc. is a medical technology company. The Company develops, manufactures and markets products and services for patients suffering from chronic or acute kidney failure. It operates through three segments. The System One segment includes revenues from the sale and rental of the System One and PureFlow SL dialysate preparation equipment and the sale of disposable products in the home and critical care markets. The In-Center segment includes revenues from the sale of blood tubing sets and needles for hemodialysis, primarily for the treatment of end-stage renal disease patients at dialysis clinics, and needles for apheresis. It markets extracorporeal disposable products under the Medisystems brand. The Services segment includes revenues from dialysis services provided to patients at its NxStage Kidney Care dialysis centers. Its product offerings include Home Dialysis, Next-Generation Hemodialysis System, Critical Care, Next-Generation Critical Care System and In-Center.

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