Critical Comparison: Tactile Systems Technology (NASDAQ:TCMD) vs. Westaim (OTCMKTS:WEDXF)

Tactile Systems Technology (NASDAQ:TCMD) and Westaim (OTCMKTS:WEDXF) are both medical companies, but which is the better investment? We will compare the two businesses based on the strength of their profitability, analyst recommendations, valuation, institutional ownership, risk, earnings and dividends.

Analyst Recommendations

This is a summary of recent ratings and recommmendations for Tactile Systems Technology and Westaim, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Tactile Systems Technology	0	2	0	1	2.67
Westaim	0	0	0	0	0.00

Tactile Systems Technology presently has a consensus target price of $23.00, suggesting a potential upside of 33.10%. Given Tactile Systems Technology’s stronger consensus rating and higher probable upside, analysts clearly believe Tactile Systems Technology is more favorable than Westaim.

Institutional & Insider Ownership

83.4% of Tactile Systems Technology shares are held by institutional investors. 1.0% of Tactile Systems Technology shares are held by insiders. Comparatively, 4.2% of Westaim shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.

Profitability

This table compares Tactile Systems Technology and Westaim’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Tactile Systems Technology	5.42%	9.24%	6.56%
Westaim	284.74%	7.76%	7.29%

Earnings and Valuation

This table compares Tactile Systems Technology and Westaim”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Tactile Systems Technology	$274.42 million	1.51	$28.51 million	$0.65	26.59
Westaim	$8.63 million	305.21	$183.98 million	$0.29	70.86

Westaim has lower revenue, but higher earnings than Tactile Systems Technology. Tactile Systems Technology is trading at a lower price-to-earnings ratio than Westaim, indicating that it is currently the more affordable of the two stocks.

Volatility & Risk

Tactile Systems Technology has a beta of 1.21, suggesting that its share price is 21% more volatile than the S&P 500. Comparatively, Westaim has a beta of 0.45, suggesting that its share price is 55% less volatile than the S&P 500.

Summary

Tactile Systems Technology beats Westaim on 8 of the 14 factors compared between the two stocks.

About Tactile Systems Technology

Tactile Systems Technology, Inc., a medical technology company, develops and provides medical devices to treat underserved chronic diseases in the United States. It offers Flexitouch Plus system, a pneumatic compression device for the treatment of lymphedema in the home setting; and Entre Plus System, a portable pneumatic compression device for the at-home treatment of venous disorders, such as lymphedema and chronic venous insufficiency, including venous leg ulcers. The company also provides Kylee, a mobile application to help patients learn about lymphedema, track their symptoms, and treatment, as well as to share their progress with their doctor; and AffloVest, a portable high frequency chest wall oscillation vest to treat patients with retained pulmonary secretions resulting from bronchiectasis, cystic fibrosis, and various neuromuscular disorders. Tactile Systems Technology, Inc. was incorporated in 1995 and is headquartered in Minneapolis, Minnesota.

About Westaim

The Westaim Corporation is a private equity firm specializing in direct and indirect investments through acquisitions, joint ventures, secondary investments both direct and indirect, fund of fund investments, and other arrangements. For direct investments, the firm invests in early venture, mid venture, late venture, middle market, later stage, mature, emerging growth, PIPEs, and buyout transactions. For fund of fund investments, it seeks to invest in private equity funds, venture capital funds, and hedge funds. The firm seeks to provide long term capital to businesses operating in the global financial services industry. It typically acquires controlling interests in businesses. The firm seeks to acquire debt, equity, or derivative securities of both public and private companies. It invests with the objective of providing its shareholders with capital appreciation and real wealth preservation. The firm seeks to provide its portfolio companies with advisory services including, but not limited to, advice on capital allocation, financing strategy, performance measurement and merger and acquisition support. It also seeks to partner with like-minded providers of third party capital to help supplement the firm's own capital, when completing acquisitions. The firm generally seeks to hold its investments for seven to 15 years. The Westaim Corporation was founded in 1996 and is based in Toronto, Canada.