Contrasting Avanos Medical (NYSE:AVNS) & Outset Medical (NASDAQ:OM)

Avanos Medical (NYSE:AVNS) and Outset Medical (NASDAQ:OM) are both small-cap healthcare companies, but which is the better investment? We will contrast the two businesses based on the strength of their analyst recommendations, dividends, earnings, profitability, institutional ownership, valuation and risk.

Earnings & Valuation

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

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Avanos Medical	$715.90 million	1.64	-$72.90 million	($1.61)	-15.52
Outset Medical	$119.48 million	0.68	-$81.65 million	($4.09)	-1.05

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

Insider & Institutional Ownership

95.2% of Avanos Medical shares are held by institutional investors. 2.3% of Avanos Medical shares are held by insiders. Comparatively, 2.5% of Outset Medical shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Avanos Medical	-10.39%	5.39%	3.97%
Outset Medical	-63.06%	-61.67%	-28.25%

Analyst Recommendations

This is a summary of recent ratings and recommmendations for Avanos Medical and Outset Medical, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Avanos Medical	1	1	0	0	1.50
Outset Medical	1	1	3	0	2.40

Outset Medical has a consensus target price of $10.00, suggesting a potential upside of 132.56%. Given Outset Medical’s stronger consensus rating and higher probable upside, analysts clearly believe Outset Medical is more favorable than Avanos Medical.

Risk & Volatility

Avanos Medical has a beta of 1.57, meaning that its stock price is 57% more volatile than the S&P 500. Comparatively, Outset Medical has a beta of 1.96, meaning that its stock price is 96% more volatile than the S&P 500.

Summary

Avanos Medical beats Outset Medical on 8 of the 14 factors compared between the two stocks.

About Avanos Medical

Avanos Medical, Inc., a medical technology company, offers medical device solutions in North America, Europe, the Middle East, Africa, the Asia Pacific, and Latin America. It offers a portfolio of chronic care products that include digestive health products, such as Mic-Key enteral feeding tubes, Corpak patient feeding solutions, and NeoMed neonatal and pediatric feeding solutions. The company also provides a portfolio of non-opioid pain solutions, including surgical pain and recovery products, such as ON-Q and ambIT surgical pain pumps, Game Ready cold, and compression therapy systems. In addition, it offers interventional pain solutions, which offers minimally invasive pain-relieving therapies, such as Coolief pain relief therapy; OrthogenRx's knee osteoarthritis hyaluronic acid pain relief injection products; and Trident radiofrequency ablation products to treat chronic pain conditions. It markets its products directly to hospitals and other healthcare providers, healthcare facilities, and other end-user customers, as well as through third-party wholesale distributors. The company was formerly known as Halyard Health, Inc. and changed its name to Avanos Medical, Inc. in June 2018. Avanos Medical, Inc. was incorporated in 2014 and is headquartered in Alpharetta, Georgia.

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.