Financial Review: IRIDEX (NASDAQ:IRIX) & Tandem Diabetes Care (NASDAQ:TNDM)

Tandem Diabetes Care (NASDAQ:TNDM) and IRIDEX (NASDAQ:IRIX) are both small-cap healthcare companies, but which is the better stock? We will compare the two businesses based on the strength of their earnings, dividends, risk, profitability, institutional ownership, valuation and analyst recommendations.

Analyst Ratings

This is a breakdown of recent ratings and target prices for Tandem Diabetes Care and IRIDEX, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Tandem Diabetes Care	1	11	10	1	2.48
IRIDEX	1	0	1	0	2.00

Tandem Diabetes Care presently has a consensus target price of $29.18, suggesting a potential upside of 91.75%. IRIDEX has a consensus target price of $3.00, suggesting a potential upside of 376.19%. Given IRIDEX’s higher probable upside, analysts clearly believe IRIDEX is more favorable than Tandem Diabetes Care.

Institutional & Insider Ownership

20.1% of IRIDEX shares are owned by institutional investors. 2.1% of Tandem Diabetes Care shares are owned by company insiders. Comparatively, 8.6% of IRIDEX shares are owned by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Valuation & Earnings

This table compares Tandem Diabetes Care and IRIDEX”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Tandem Diabetes Care	$1.01 billion	1.04	-$204.71 million	($0.93)	-16.37
IRIDEX	$51.57 million	0.21	-$4.44 million	($0.20)	-3.15

IRIDEX has lower revenue, but higher earnings than Tandem Diabetes Care. Tandem Diabetes Care is trading at a lower price-to-earnings ratio than IRIDEX, indicating that it is currently the more affordable of the two stocks.

Risk & Volatility

Tandem Diabetes Care has a beta of 1.55, indicating that its share price is 55% more volatile than the S&P 500. Comparatively, IRIDEX has a beta of 0.62, indicating that its share price is 38% less volatile than the S&P 500.

Profitability

This table compares Tandem Diabetes Care and IRIDEX’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Tandem Diabetes Care	-6.08%	-45.97%	-6.23%
IRIDEX	-6.88%	N/A	-12.55%

Summary

Tandem Diabetes Care beats IRIDEX on 8 of the 15 factors compared between the two stocks.

About Tandem Diabetes Care

Tandem Diabetes Care, Inc., a medical device company, designs, develops, and commercializes technology solutions for people living with diabetes in the United States and internationally. The company's flagship product is the t:slim X2 insulin delivery system, a pump platform for managing insulin delivery and display continuous glucose monitoring sensor information directly on the pump home screen; and Tandem Mobi insulin pump, an automated insulin delivery system. It also sells single-use products, including cartridges for storing and delivering insulin, and infusion sets that connect the insulin pump to the user's body. In addition, the company offers Tandem Device Updater used to update the pump software from a personal computer; Tandem Source, a web-based data management platform, which provides a visual way to display diabetes therapy management data from the pumps, integrated CGMs, and supported blood glucose meters; and Sugarmate, a mobile app used to help people visualize diabetes therapy data. The company was formerly known as Phluid Inc. and changed its name to Tandem Diabetes Care, Inc. in January 2008. Tandem Diabetes Care, Inc. was incorporated in 2006 and is headquartered in San Diego, California.

About IRIDEX

IRIDEX Corporation, an ophthalmic medical technology company, provides therapeutic based laser systems, delivery devices, and consumable instrumentation to treat sight-threatening eye diseases in ophthalmology. It offers laser consoles, such as Cyclo G6 laser system for use in the treatment of glaucoma; IQ 532 and IQ 577 laser systems, which are used for the treatment of retinal disorders; and OcuLight TX, OcuLight SL, OcuLight SLx, OcuLight GL, and OcuLight GLx laser photocoagulation systems that are used to treat proliferative diabetic retinopathy, macular holes, retinal tears, and detachments. The company also provides delivery devices, including TxCell scanning laser delivery system that allows the physician to perform multi-spot pattern scanning; slit lamp adapter, which allows the physician to utilize a standard slit lamp in diagnosis and treatment procedures; and laser indirect ophthalmoscope for use in procedures to treat peripheral retinal disorders. It offers MicroPulse P3 Probe, which is used with its Cylco G6 laser system to perform MicroPulse transscleral laser therapy; G-Probe, which is used in procedures to treat uncontrolled glaucoma; G-Probe and G-Probe Illuminate, which are used in procedures to treat refractory glaucoma; and EndoProbe family of products for use in vitrectomy procedures. The company serves ophthalmologists, research and teaching hospitals, government installations, surgical centers, hospitals, veterinary practices, and office clinics. It markets its products through direct and independent sales force in the United States, as well as through independent distributors internationally. The company was formerly known as IRIS Medical Instruments, Inc. and changed its name to IRIDEX Corporation in November 1995. IRIDEX Corporation was incorporated in 1989 and is headquartered in Mountain View, California.