Critical Comparison: Solventum (NYSE:SOLV) and COMPASS Pathways (NASDAQ:CMPS)

Solventum (NYSE:SOLV) and COMPASS Pathways (NASDAQ:CMPS) are both medical companies, but which is the better stock? We will compare the two businesses based on the strength of their risk, profitability, institutional ownership, dividends, earnings, analyst recommendations and valuation.

Institutional and Insider Ownership

46.2% of COMPASS Pathways shares are owned by institutional investors. 0.1% of Solventum shares are owned by company insiders. Comparatively, 3.9% of COMPASS Pathways shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Earnings and Valuation

This table compares Solventum and COMPASS Pathways”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Solventum	$8.39 billion	1.40	$478.00 million	$2.16	31.41
COMPASS Pathways	N/A	N/A	-$155.12 million	($1.84)	-3.24

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

Analyst Recommendations

This is a summary of current ratings and recommmendations for Solventum and COMPASS Pathways, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Solventum	1	7	3	1	2.33
COMPASS Pathways	1	1	6	0	2.63

Solventum currently has a consensus price target of $84.89, suggesting a potential upside of 25.14%. COMPASS Pathways has a consensus price target of $16.57, suggesting a potential upside of 177.76%. Given COMPASS Pathways’ stronger consensus rating and higher possible upside, analysts clearly believe COMPASS Pathways is more favorable than Solventum.

Profitability

This table compares Solventum and COMPASS Pathways’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Solventum	4.52%	29.93%	6.65%
COMPASS Pathways	N/A	-87.89%	-57.77%

Risk & Volatility

Solventum has a beta of 0.5, meaning that its share price is 50% less volatile than the S&P 500. Comparatively, COMPASS Pathways has a beta of 2.22, meaning that its share price is 122% more volatile than the S&P 500.

Summary

Solventum beats COMPASS Pathways on 8 of the 14 factors compared between the two stocks.

About Solventum

Solventum Corporation, a healthcare company, engages in the developing, manufacturing, and commercializing a portfolio of solutions to address critical customer and patient needs. It operates through four segments: Medsurg, Dental Solutions, Health Information Systems, and Purification and Filtration. The Medsurg segment is a provider of solutions including advanced wound care, I.V. site management, sterilization assurance, temperature management, surgical supplies, stethoscopes, and medical electrodes. The Dental Solutions segment provides a comprehensive suite of dental and orthodontic products including brackets, aligners, restorative cements, and bonding agents. The Health Information Systems provides software solutions including computer-assisted, physician documentation, direct-to-bill and coding automation, classification methodologies, speech, recognition, and data visualization platforms. The Purification and Filtration segment provides purification and filtration technologies including filters, purifiers, cartridges, and membranes. The company was incorporated in 2023 and is based in Saint Paul, Minnesota.

About COMPASS Pathways

COMPASS Pathways plc operates as a mental health care company in the United Kingdom and the United States. It develops COMP360, a psilocybin therapy that is in Phase III clinical trials for the treatment of treatment-resistant depression; and is in Phase II clinical trials for the treatment of post-traumatic stress disorder and anorexia nervosa. The company was formerly known as COMPASS Rx Limited and changed its name to COMPASS Pathways plc in August 2020. COMPASS Pathways plc was incorporated in 2020 and is headquartered in London, the United Kingdom.