Critical Review: ResMed (NYSE:RMD) and Brainsway (NASDAQ:BWAY)

ResMed (NYSE:RMD) and Brainsway (NASDAQ:BWAY) are both healthcare companies, but which is the better business? We will compare the two companies based on the strength of their valuation, earnings, institutional ownership, profitability, dividends, risk and analyst recommendations.

Institutional and Insider Ownership

55.0% of ResMed shares are held by institutional investors. Comparatively, 30.1% of Brainsway shares are held by institutional investors. 0.7% of ResMed shares are held by insiders. Comparatively, 19.0% of Brainsway shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.

Volatility & Risk

ResMed has a beta of 0.77, meaning that its stock price is 23% less volatile than the S&P 500. Comparatively, Brainsway has a beta of 1.25, meaning that its stock price is 25% more volatile than the S&P 500.

Profitability

This table compares ResMed and Brainsway’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
ResMed	26.94%	25.58%	18.89%
Brainsway	15.65%	12.74%	8.17%

Earnings and Valuation

This table compares ResMed and Brainsway”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
ResMed	$5.65 billion	5.59	$1.52 billion	$10.43	21.00
Brainsway	$52.22 million	10.09	$7.57 million	$0.44	29.79

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

Analyst Ratings

This is a summary of recent ratings and recommmendations for ResMed and Brainsway, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
ResMed	0	9	7	0	2.44
Brainsway	0	2	5	0	2.71

ResMed presently has a consensus price target of $241.69, indicating a potential upside of 10.36%. Brainsway has a consensus price target of $18.20, indicating a potential upside of 38.84%. Given Brainsway’s stronger consensus rating and higher probable upside, analysts clearly believe Brainsway is more favorable than ResMed.

Summary

ResMed beats Brainsway on 8 of the 14 factors compared between the two stocks.

About ResMed

ResMed Inc. develops, manufactures, distributes, and markets medical devices and cloud-based software applications for the healthcare markets. The company operates in two segments, Sleep and Respiratory Care, and Software as a Service. It offers various products and solutions for a range of respiratory disorders, including ApneaLink Air, a portable diagnostic device that measures oximetry, respiratory effort, pulse, nasal flow, and snoring; and NightOwl, a portable, cloud-connected, and disposable diagnostic device that measures AHI based on derived peripheral arterial tone, actigraphy, and oximetry over several nights. The company also provides AirView, a cloud-based system that enables remote monitoring and changing of patients’ device settings; myAir, a personalized therapy management application for patients with sleep apnea that provides support, education, and troubleshooting tools for increased patient engagement and improved compliance; U-Sleep, a compliance monitoring solution that enables home medical equipment (HME) to streamline their sleep programs; connectivity module and propeller solutions; and Propeller portal. It offers out-of-hospital software solution, such as Brightree business management software and service solutions to providers of HME, pharmacy, home infusion, orthotics, and prosthetics services; MatrixCare care management and related ancillary solutions to senior living, skilled nursing, life plan communities, home health, home care, and hospice organizations, as well as related accountable care organizations; HEALTHCAREfirst that offers electronic health record, software, billing and coding services, and analytics for home health and hospice agencies; and MEDIFOX DAN’s software solutions. The company markets its products to sleep clinics, home healthcare dealers, and hospitals through a network of distributors and direct sales force. ResMed Inc. was founded in 1989 and is headquartered in San Diego, California.

About Brainsway

BrainsWay Ltd. develops and sells noninvasive neurostimulation treatments for mental health disorders in the United States and internationally. It offers Deep Transcranial Magnetic Stimulation platform technology for the treatment of major depressive disorders, anxious depression, obsessive-compulsive disorders, smoking addiction, bipolar disorders, post traumatic stress disorders, schizophrenia, Alzheimer's disease, autism, chronic pain, multiple sclerosis, post stroke rehabilitation, and Parkinson's diseases. The company serves doctors, hospitals, and medical centers in the field of psychiatry. BrainsWay Ltd. was founded in 2003 and is headquartered in Jerusalem, Israel.