Comparing Pulmonx (NASDAQ:LUNG) and Outset Medical (NASDAQ:OM)

Outset Medical (NASDAQ:OM) and Pulmonx (NASDAQ:LUNG) are both small-cap medical companies, but which is the better business? We will compare the two businesses based on the strength of their analyst recommendations, risk, earnings, dividends, institutional ownership, profitability and valuation.

Institutional and Insider Ownership

91.0% of Pulmonx shares are owned by institutional investors. 2.4% of Outset Medical shares are owned by company insiders. Comparatively, 6.8% of Pulmonx shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.

Volatility & Risk

Outset Medical has a beta of 2.12, indicating that its share price is 112% more volatile than the S&P 500. Comparatively, Pulmonx has a beta of 0.07, indicating that its share price is 93% less volatile than the S&P 500.

Valuation and Earnings

This table compares Outset Medical and Pulmonx”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Outset Medical	$119.48 million	0.59	-$81.65 million	($6.79)	-0.57
Pulmonx	$90.50 million	0.60	-$54.00 million	($1.33)	-0.97

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

Analyst Recommendations

This is a breakdown of current recommendations and price targets for Outset Medical and Pulmonx, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Outset Medical	1	1	2	1	2.60
Pulmonx	1	3	4	0	2.38

Outset Medical currently has a consensus price target of $10.00, suggesting a potential upside of 160.42%. Pulmonx has a consensus price target of $5.38, suggesting a potential upside of 316.94%. Given Pulmonx’s higher possible upside, analysts plainly believe Pulmonx is more favorable than Outset Medical.

Profitability

This table compares Outset Medical and Pulmonx’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Outset Medical	-68.34%	-55.65%	-28.64%
Pulmonx	-59.67%	-82.79%	-38.20%

Summary

Pulmonx beats Outset Medical on 8 of the 15 factors compared between the two stocks.

About Outset Medical

Outset Medical, Inc., a medical technology company, engages in the development of a hemodialysis system for hemodialysis in the United States. The company offers Tablo Hemodialysis System, a compact console with integrated water purification, on-demand dialysate production, and software and connectivity capabilities for dialysis care in acute and home settings; and manufactures, supports, and distributes for Tablo console, Tablo cartridge, and other consumables. It also provides Tablo Data Ecosystem, including TabloHub, a customer-facing portal; MyTablo, a patient-facing portal; and TabloDash, an internal data analytics platform. The company was formerly known as Home Dialysis Plus, Ltd. and changed its name to Outset Medical, Inc. in January 2015. Outset Medical, Inc. was incorporated in 2003 and is headquartered in San Jose, California.

About Pulmonx

Pulmonx Corporation, a commercial-stage medical technology company, provides minimally invasive devices for the treatment of chronic obstructive pulmonary diseases. The company offers Zephyr Endobronchial Valve, a solution for the treatment of patients with hyperinflation associated with severe emphysema; and Chartis Pulmonary Assessment System, a balloon catheter and console system with flow and pressure sensors that are used to assess the presence of collateral ventilation. It also offers StratX Lung Analysis Platform, a cloud-based quantitative computed tomography analysis service that offers information on emphysema destruction, fissure completeness, and lobar volume to help identify target lobes for the treatment with Zephyr Valves. The company serves emphysema patients in the United States, Europe, the Middle East, Africa, the Asia-Pacific, and internationally. The company was formerly known as Pulmonx and changed its name to Pulmonx Corporation in December 2013. Pulmonx Corporation was incorporated in 1995 and is headquartered in Redwood City, California.