Analyzing Natera (NASDAQ:NTRA) and Establishment Labs (NASDAQ:ESTA)

Natera (NASDAQ:NTRA) and Establishment Labs (NASDAQ:ESTA) are both medical companies, but which is the superior business? We will contrast the two companies based on the strength of their dividends, analyst recommendations, institutional ownership, risk, profitability, earnings and valuation.

Profitability

This table compares Natera and Establishment Labs’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Natera	-14.61%	-25.07%	-17.74%
Establishment Labs	-43.45%	-235.45%	-22.83%

Insider and Institutional Ownership

99.9% of Natera shares are held by institutional investors. Comparatively, 72.9% of Establishment Labs shares are held by institutional investors. 5.6% of Natera shares are held by company insiders. Comparatively, 11.1% of Establishment Labs shares are held by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock is poised for long-term growth.

Analyst Recommendations

This is a breakdown of recent ratings and price targets for Natera and Establishment Labs, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Natera	1	3	13	1	2.78
Establishment Labs	1	1	6	0	2.63

Natera currently has a consensus price target of $249.20, indicating a potential upside of 17.29%. Establishment Labs has a consensus price target of $78.86, indicating a potential upside of 8.44%. Given Natera’s stronger consensus rating and higher possible upside, equities analysts clearly believe Natera is more favorable than Establishment Labs.

Valuation and Earnings

This table compares Natera and Establishment Labs”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Natera	$1.70 billion	17.32	-$190.43 million	($2.29)	-92.78
Establishment Labs	$190.97 million	11.06	-$84.60 million	($2.84)	-25.61

Establishment Labs has lower revenue, but higher earnings than Natera. Natera is trading at a lower price-to-earnings ratio than Establishment Labs, indicating that it is currently the more affordable of the two stocks.

Volatility & Risk

Natera has a beta of 1.64, meaning that its share price is 64% more volatile than the S&P 500. Comparatively, Establishment Labs has a beta of 0.99, meaning that its share price is 1% less volatile than the S&P 500.

Summary

Natera beats Establishment Labs on 12 of the 15 factors compared between the two stocks.

About Natera

Natera, Inc., a diagnostics company, develops and commercializes molecular testing services worldwide. Its products include Panorama, a non-invasive prenatal test that screens for chromosomal abnormalities of a fetus, as well as in twin pregnancies; Horizon carrier screening test for individuals and couples determine if they are carriers of genetic variations that cause certain genetic conditions; Vistara single-gene NIPT screens for 25 single-gene disorders that cause severe skeletal, cardiac, and neurological conditions; Spectrum, preimplantation genetic tests for couples undergoing IVF; Anora that analyzes miscarriage tissue from women; Empower, a hereditary cancer screening test; and non-invasive prenatal paternity product, which allows a couple to establish paternity without waiting for the child to be born. The company also provides Signatera, a ctDNA blood test for molecular residual disease assessment and surveillance of disease recurrence in patients previously diagnosed with cancer; Altera, a tissue based comprehensive genomic profiling test; Prospera to assess active rejection in patients who have undergone kidney, heart, and lung transplantation; and Renasight, a kidney gene panel test. In addition, it offers Constellation, a cloud-based software product that enables laboratory customers to gain access through the cloud to the company's algorithms and bioinformatics to validate and launch tests. The company offers products through its direct sales force, as well as through a network of laboratory and distribution partners. It has a partnership agreement with BGI Genomics Co., Ltd. to develop, manufacture, and commercialize NGS-based genetic testing assays; and Foundation Medicine, Inc. to develop and commercialize personalized circulating tumor DNA monitoring assays. The company was founded in 2003 and is headquartered in Austin, Texas.

About Establishment Labs

Establishment Labs Holdings Inc., a medical technology company, manufactures and markets medical devices for aesthetic and reconstructive plastic surgery. The company primarily offers silicone gel-filled breast implants under the Motiva Implants brand. It also provides Motiva Ergonomix and Motiva Ergonomix2 gravity sensitive round soft silicone-gel-filled breast implants; and Motiva Flora Tissue Expander, a breast tissue expander. The company sells its products to physicians, hospitals, and clinics through distributors and direct sales force in Europe, the Middle East, Latin America, and Asia. Establishment Labs Holdings Inc. was incorporated in 2004 and is headquartered in Alajuela, Costa Rica.