Reviewing ResMed (NYSE:RMD) and Varex Imaging (NASDAQ:VREX)

ResMed (NYSE:RMD) and Varex Imaging (NASDAQ:VREX) are both medical companies, but which is the superior business? We will contrast the two companies based on the strength of their valuation, earnings, profitability, analyst recommendations, risk, institutional ownership and dividends.

Volatility & Risk

ResMed has a beta of 0.87, meaning that its share price is 13% less volatile than the S&P 500. Comparatively, Varex Imaging has a beta of 0.98, meaning that its share price is 2% less volatile than the S&P 500.

Valuation and Earnings

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

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
ResMed	$5.26 billion	7.11	$1.40 billion	$9.77	26.20
Varex Imaging	$844.60 million	0.55	-$70.30 million	($1.70)	-6.59

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

Insider and Institutional Ownership

55.0% of ResMed shares are owned by institutional investors. 0.7% of ResMed shares are owned by company insiders. Comparatively, 4.3% of Varex Imaging 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.

Analyst Recommendations

This is a breakdown of recent ratings and price targets for ResMed and Varex Imaging, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
ResMed	0	5	9	2	2.81
Varex Imaging	1	0	2	0	2.33

ResMed currently has a consensus price target of $297.45, suggesting a potential upside of 16.20%. Varex Imaging has a consensus price target of $17.00, suggesting a potential upside of 51.65%. Given Varex Imaging’s higher probable upside, analysts plainly believe Varex Imaging is more favorable than ResMed.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
ResMed	27.22%	25.62%	18.69%
Varex Imaging	-8.32%	7.19%	3.06%

Summary

ResMed beats Varex Imaging on 12 of the 15 factors compared between the two stocks.

About ResMed

ResMed Inc. develops, manufactures, distributes, and markets medical devices and cloud-based software applications for the healthcare markets. The company operates in two segments, Sleep and Respiratory Care, and Software as a Service. It offers various products and solutions for a range of respiratory disorders, including ApneaLink Air, a portable diagnostic device that measures oximetry, respiratory effort, pulse, nasal flow, and snoring; and NightOwl, a portable, cloud-connected, and disposable diagnostic device that measures AHI based on derived peripheral arterial tone, actigraphy, and oximetry over several nights. The company also provides AirView, a cloud-based system that enables remote monitoring and changing of patients’ device settings; myAir, a personalized therapy management application for patients with sleep apnea that provides support, education, and troubleshooting tools for increased patient engagement and improved compliance; U-Sleep, a compliance monitoring solution that enables home medical equipment (HME) to streamline their sleep programs; connectivity module and propeller solutions; and Propeller portal. It offers out-of-hospital software solution, such as Brightree business management software and service solutions to providers of HME, pharmacy, home infusion, orthotics, and prosthetics services; MatrixCare care management and related ancillary solutions to senior living, skilled nursing, life plan communities, home health, home care, and hospice organizations, as well as related accountable care organizations; HEALTHCAREfirst that offers electronic health record, software, billing and coding services, and analytics for home health and hospice agencies; and MEDIFOX DAN’s software solutions. The company markets its products to sleep clinics, home healthcare dealers, and hospitals through a network of distributors and direct sales force. ResMed Inc. was founded in 1989 and is headquartered in San Diego, California.

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.