Analyzing TerrAscend (OTCMKTS:TSNDF) & Varex Imaging (NASDAQ:VREX)

TerrAscend (OTCMKTS:TSNDF) and Varex Imaging (NASDAQ:VREX) are both small-cap healthcare companies, but which is the better stock? We will contrast the two businesses based on the strength of their analyst recommendations, dividends, risk, valuation, earnings, profitability and institutional ownership.

Insider and Institutional Ownership

5.8% of TerrAscend shares are held by institutional investors. 31.9% of TerrAscend shares are held by insiders. Comparatively, 4.6% of Varex Imaging shares are held by 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.

Earnings and Valuation

This table compares TerrAscend and Varex Imaging”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
TerrAscend	$260.56 million	0.54	-$81.33 million	($0.11)	-4.14
Varex Imaging	$844.60 million	0.93	-$70.30 million	$0.52	35.48

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

Volatility and Risk

TerrAscend has a beta of 1.47, meaning that its share price is 47% more volatile than the S&P 500. Comparatively, Varex Imaging has a beta of 1.02, meaning that its share price is 2% more volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of current ratings for TerrAscend and Varex Imaging, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
TerrAscend	0	1	0	0	2.00
Varex Imaging	0	7	0	0	2.00

Varex Imaging has a consensus target price of $16.88, indicating a potential downside of 8.54%. Given Varex Imaging’s higher possible upside, analysts plainly believe Varex Imaging is more favorable than TerrAscend.

Profitability

This table compares TerrAscend and Varex Imaging’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
TerrAscend	-31.01%	-32.93%	-5.49%
Varex Imaging	2.55%	9.19%	4.13%

Summary

Varex Imaging beats TerrAscend on 9 of the 12 factors compared between the two stocks.

About TerrAscend

TerrAscend Corp. cultivates, processes, and sells medical and adult use cannabis in Canada and the United States. The company produces and distributes hemp-derived wellness products to retail locations; and manufactures vaporizables, concentrates, topicals, tinctures and edibles. It also operates retail dispensaries under the Apothecarium and State Flower brand names. The company was incorporated in 2017 and is headquartered in Mississauga, Canada.

About Varex Imaging

Varex Imaging Corporation designs, manufactures, and sells X-ray imaging components. The company operates through two segments, Medical and Industrial. The Medical segment designs, manufactures, sells, and services X-ray imaging components, comprising X-ray tubes, digital detectors and accessories, ionization chambers, high voltage connectors, image-processing software and workstations, 3D reconstruction software, computer-aided diagnostic software, collimators, automatic exposure control devices, generators, and heat exchangers. This segment's products are used in a range of applications, including CT, mammography, oncology, cardiac, surgery, dental, and other diagnostic radiography uses. The Industrial segment designs, develops, manufactures, sells, and services Linatron X-ray linear accelerators, X-ray tubes, digital detectors, high voltage connectors, and coolers for use in security and inspection applications, such as baggage screening at airports, cargo screening at ports and borders, and nondestructive testing, irradiation, and inspection in various applications. The company sells its products through imaging system original equipment manufacturers, independent service companies, and distributors, as well as directly to end-users. It has operations in North America, South America, Europe, Russia, the Middle East, India, Africa, Asia, and Australia. Varex Imaging Corporation was incorporated in 2016 and is headquartered in Salt Lake City, Utah.