Critical Review: DexCom (NASDAQ:DXCM) and NeuroPace (NASDAQ:NPCE)

NeuroPace (NASDAQ:NPCE) and DexCom (NASDAQ:DXCM) are both medical companies, but which is the better business? We will contrast the two businesses based on the strength of their valuation, dividends, profitability, earnings, analyst recommendations, risk and institutional ownership.

Risk and Volatility

NeuroPace has a beta of 1.85, suggesting that its share price is 85% more volatile than the S&P 500. Comparatively, DexCom has a beta of 1.48, suggesting that its share price is 48% more volatile than the S&P 500.

Analyst Ratings

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

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
NeuroPace	1	1	6	0	2.63
DexCom	2	4	19	2	2.78

NeuroPace currently has a consensus price target of $18.50, suggesting a potential upside of 11.99%. DexCom has a consensus price target of $86.30, suggesting a potential upside of 22.02%. Given DexCom’s stronger consensus rating and higher probable upside, analysts clearly believe DexCom is more favorable than NeuroPace.

Insider and Institutional Ownership

78.8% of NeuroPace shares are held by institutional investors. Comparatively, 97.8% of DexCom shares are held by institutional investors. 20.5% of NeuroPace shares are held by company insiders. Comparatively, 0.3% of DexCom shares are held by company 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.

Valuation & Earnings

This table compares NeuroPace and DexCom”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
NeuroPace	$79.91 million	6.89	-$27.14 million	($0.76)	-21.74
DexCom	$4.03 billion	6.84	$576.20 million	$1.80	39.29

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

Profitability

This table compares NeuroPace and DexCom’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
NeuroPace	-25.28%	-136.60%	-22.94%
DexCom	15.96%	30.65%	10.56%

Summary

DexCom beats NeuroPace on 12 of the 15 factors compared between the two stocks.

About NeuroPace

NeuroPace, Inc. operates as a medical device company in the United States. The company develops RNS system, a brain-responsive neuromodulation system that delivers personalized, real-time treatment at the seizure source for treating medically refractory focal epilepsy. It also records continuous brain activity data and enables clinicians to monitor patients in person and remotely. Its RNS System includes RNS neurostimulator, cortical strip and depth leads, and Patient Remote Monitor, as well as other implantable and non-implantable accessories. The company sells its products to hospital facilities for initial RNS system implant procedures and for replacement procedures. NeuroPace, Inc. was incorporated in 1997 and is headquartered in Mountain View, California.

About DexCom

DexCom, Inc., a medical device company, focuses on the design, development, and commercialization of continuous glucose monitoring (CGM) systems in the United States and internationally. The company provides its systems for use by people with diabetes, as well as for use by healthcare providers. Its products include Dexcom G6 and Dexcom G7, integrated CGM systems for diabetes management; Dexcom Share, a remote monitoring system; Dexcom Real-Time API, which enables authorized third-party software developers to integrate real-time CGM data into their digital health apps and devices; and Dexcom ONE, that is designed to replace finger stick blood glucose testing for diabetes treatment decisions. It has also submitted FDA review for Dexcom Stelo for people with type 2 diabetes. The company has a collaboration and license agreement with Verily Life Sciences LLC and Verily Ireland Limited to develop blood-based or interstitial glucose monitoring products. It markets its products directly to endocrinologists, physicians, and diabetes educators. The company was incorporated in 1999 and is headquartered in San Diego, California.