Alere (NYSE: ALR) and ABAXIS (NASDAQ:ABAX) are both medical companies, but which is the better investment? We will contrast the two businesses based on the strength of their dividends, profitability, earnings, institutional ownership, risk, analyst recommendations and valuation.

Analyst Recommendations

This is a breakdown of recent recommendations and price targets for Alere and ABAXIS, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Alere 0 5 0 0 2.00
ABAXIS 1 4 1 0 2.00

Alere presently has a consensus price target of $48.00, suggesting a potential downside of 3.69%. ABAXIS has a consensus price target of $48.63, suggesting a potential upside of 7.70%. Given ABAXIS’s higher probable upside, analysts clearly believe ABAXIS is more favorable than Alere.

Dividends

ABAXIS pays an annual dividend of $0.56 per share and has a dividend yield of 1.2%. Alere does not pay a dividend. ABAXIS pays out 39.7% of its earnings in the form of a dividend.

Institutional & Insider Ownership

88.8% of Alere shares are held by institutional investors. Comparatively, 97.3% of ABAXIS shares are held by institutional investors. 3.7% of Alere shares are held by company insiders. Comparatively, 4.1% of ABAXIS 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.

Profitability

This table compares Alere and ABAXIS’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Alere -10.73% 4.54% 1.01%
ABAXIS 14.12% 10.85% 9.44%

Valuation & Earnings

This table compares Alere and ABAXIS’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Alere $2.32 billion 1.88 $261.20 million ($2.45) -20.34
ABAXIS $227.78 million 4.50 $49.81 million $1.41 32.02

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

Volatility & Risk

Alere has a beta of 0.21, suggesting that its stock price is 79% less volatile than the S&P 500. Comparatively, ABAXIS has a beta of 0.81, suggesting that its stock price is 19% less volatile than the S&P 500.

Summary

ABAXIS beats Alere on 12 of the 15 factors compared between the two stocks.

Alere Company Profile

Alere Inc. is a provider of health information through diagnostic tests. The Company’s segments include professional diagnostics, consumer diagnostics, and corporate and other. The professional diagnostics segment includes an array of diagnostic test products and other in vitro diagnostic tests marketed to medical professionals and laboratories for detection of diseases and conditions within its areas of focus. The consumer diagnostics segment consists primarily of manufacturing operations related to its role as the exclusive manufacturer of products for SPD Swiss Precision Diagnostics (SPD), its joint venture with The Procter & Gamble Company (P&G). The Company’s professional diagnostic solutions allow patients and their healthcare providers to work together to manage patients’ conditions over the continuum of care, from the hospital to home. The Company offers lines of drugs-of-abuse tests, reagent systems and laboratory testing options.

ABAXIS Company Profile

Abaxis, Inc. is a developer, manufacturer and marketer of portable blood analysis systems that are used in medical specialties in human or veterinary patient care to provide clinicians with blood constituent measurements. The Company markets and sells its products around the world through independent distributors and direct sales force. The Company’s segments are the medical market and the veterinary market. The Company’s medical market products include Piccolo chemistry analyzers and consumable products. The Company develops, manufactures and sells the Piccolo Xpress chemistry analyzer for use in human patient care to provide clinicians with blood constituent measurements. The Company’s veterinary market product offerings include VetScan chemistry analyzers and veterinary reagent discs, VetScan hematology instruments and related reagent kits, VetScan VSpro specialty analyzers and related consumables, VetScan i-STAT analyzers and related consumables and VetScan rapid tests.

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