Critical Review: Electromed (NYSE:ELMD) & Merit Medical Systems (NASDAQ:MMSI)

Merit Medical Systems (NASDAQ:MMSI) and Electromed (NYSE:ELMD) are both healthcare companies, but which is the superior stock? We will contrast the two companies based on the strength of their valuation, analyst recommendations, earnings, risk, institutional ownership, profitability and dividends.

Valuation and Earnings

This table compares Merit Medical Systems and Electromed”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Merit Medical Systems	$1.52 billion	3.45	$128.49 million	$2.66	32.79
Electromed	$73.78 million	3.05	$5.15 million	$1.31	20.74

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

Risk and Volatility

Merit Medical Systems has a beta of 0.56, suggesting that its stock price is 44% less volatile than the S&P 500. Comparatively, Electromed has a beta of 0.43, suggesting that its stock price is 57% less volatile than the S&P 500.

Insider & Institutional Ownership

99.7% of Merit Medical Systems shares are held by institutional investors. Comparatively, 40.8% of Electromed shares are held by institutional investors. 0.7% of Merit Medical Systems shares are held by company insiders. Comparatively, 11.0% of Electromed shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.

Analyst Ratings

This is a breakdown of recent ratings and price targets for Merit Medical Systems and Electromed, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Merit Medical Systems	0	5	8	0	2.62
Electromed	0	1	3	0	2.75

Merit Medical Systems currently has a consensus price target of $105.55, suggesting a potential upside of 21.00%. Electromed has a consensus price target of $43.75, suggesting a potential upside of 61.02%. Given Electromed’s stronger consensus rating and higher possible upside, analysts plainly believe Electromed is more favorable than Merit Medical Systems.

Profitability

This table compares Merit Medical Systems and Electromed’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Merit Medical Systems	9.94%	14.12%	8.37%
Electromed	11.34%	15.71%	13.37%

About Merit Medical Systems

Merit Medical Systems, Inc. designs, develops, manufactures, and markets single-use medical products for interventional, diagnostic, and therapeutic procedures in the United States and internationally. It operates in two segments, Cardiovascular and Endoscopy. The company provides micropuncture kits, angiographic needles, sheaths, guide wires, and safety products; peripheral intervention, including angiography, drainage, delivery systems, and embolotherapy products; spine products, such as vertebral augmentation, radiofrequency ablation, and bone biopsy systems; oncology products; and cardiac intervention products, such as access, angiography, electrophysiology and cardiac rhythm management, fluid management, hemodynamic monitoring, hemostasis, and intervention to treat various heart conditions. It also offers custom procedural solutions that include critical care products, disinfection protection systems, syringes, manifold kits, and trays and packs; coating services for medical tubes and wires; and sensor components for microelectromechanical systems. In addition, the company provides pulmonary products that consist of laser-cut tracheobronchial stents, over-the-wire and direct visualization delivery systems, and dilation balloons to endoscopically dilate structures; gastroenterology products, such as covered esophageal stents, syringe and gauges, and balloon dilators; and kits and accessories for endoscopy and bronchoscopy procedures. It sells its products to hospitals and alternate site-based physicians, technicians, and nurses through direct sales force, distributors, original equipment manufacturer partners, or custom procedure tray manufacturers. The company was incorporated in 1987 and is headquartered in South Jordan, Utah.

About Electromed

Electromed, Inc. develops, manufactures, markets, and sells airway clearance therapy and related products that apply high frequency chest wall oscillation (HFCWO) therapy in pulmonary care for patients of various ages in the United States and internationally. The company offers SmartVest airway clearance system for patients with compromised pulmonary functions, including bronchiectasis and cystic fibrosis, as well as neuromuscular conditions, such as cerebral palsy and amyotrophic lateral sclerosis; SmartVest SQL System; SmartVest Clearway System that consists of an inflatable therapy garment, a programmable air pulse generator, and a patented single-hose that delivers air pulses from the generator to the garment to create oscillatory pressure on the chest wall; and SmartVest Connect, a wireless technology that allows data connection between physicians and patients to track therapy performance and collaborate in treatment decisions. It also provides single patient use SmartVest and SmartVest Wrap products for health care providers in the acute care setting. The company offers its products to hospitals, home health care centers, pulmonary rehabilitation centers, cystic fibrosis centers, neuromuscular clinics, and other clinics through distributors. It markets its products to physicians, health care providers, and directly to patients. Electromed, Inc. was incorporated in 1992 and is headquartered in New Prague, Minnesota.