Comparing IRIDEX Corporation (NASDAQ:IRIX) and Varian Medical Systems (VAR)

IRIDEX Corporation (NASDAQ: IRIX) and Varian Medical Systems (NYSE:VAR) are both computer and technology companies, but which is the superior business? We will compare the two businesses based on the strength of their dividends, analyst recommendations, earnings, risk, valuation, profitability and institutional ownership.

Analyst Recommendations

This is a summary of current recommendations for IRIDEX Corporation and Varian Medical Systems, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
IRIDEX Corporation 0 0 1 0 3.00
Varian Medical Systems 2 5 3 0 2.10

IRIDEX Corporation presently has a consensus price target of $20.00, suggesting a potential upside of 138.95%. Varian Medical Systems has a consensus price target of $93.69, suggesting a potential downside of 6.78%. Given IRIDEX Corporation’s stronger consensus rating and higher possible upside, analysts clearly believe IRIDEX Corporation is more favorable than Varian Medical Systems.

Valuation & Earnings

This table compares IRIDEX Corporation and Varian Medical Systems’ revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
IRIDEX Corporation $42.80 million 2.26 -$5.81 million ($1.51) -5.54
Varian Medical Systems $3.27 billion 2.82 $643.00 million $3.04 33.06

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

Profitability

This table compares IRIDEX Corporation and Varian Medical Systems’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
IRIDEX Corporation -37.62% -16.87% -13.86%
Varian Medical Systems 9.50% 24.70% 11.12%

Volatility and Risk

IRIDEX Corporation has a beta of 1.27, indicating that its stock price is 27% more volatile than the S&P 500. Comparatively, Varian Medical Systems has a beta of 0.61, indicating that its stock price is 39% less volatile than the S&P 500.

Insider & Institutional Ownership

50.7% of IRIDEX Corporation shares are owned by institutional investors. Comparatively, 99.0% of Varian Medical Systems shares are owned by institutional investors. 5.0% of IRIDEX Corporation shares are owned by insiders. Comparatively, 0.9% of Varian Medical Systems shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Summary

Varian Medical Systems beats IRIDEX Corporation on 9 of the 13 factors compared between the two stocks.

IRIDEX Corporation Company Profile

IRIDEX Corporation is a provider of therapeutic based laser consoles, delivery devices and consumable instrumentation used to treat sight-threatening eye diseases in ophthalmology. The Company operates through ophthalmology segment. Its ophthalmology products consist of laser consoles, delivery devices and consumable instrumentation, including laser probes, and are used in the treatment of serious eye diseases, including the over three causes of irreversible blindness, such as diabetic retinopathy, glaucoma and age-related macular degeneration (AMD). In addition, the Company’s ophthalmology products are often used in vitrectomy procedures (used to treat proliferative diabetic retinopathy, macular holes, retinal tears and detachments), which are generally performed in the operating room and require a consumable single use intraocular laser probe (EndoProbe) to deliver light to the back of the eye together with other instrumentation.

Varian Medical Systems Company Profile

Varian Medical Systems, Inc. is a manufacturer of medical devices and software for treating cancer and other medical conditions with radiotherapy, radiosurgery, proton therapy and brachytherapy medical devices and software for treating cancer and other medical conditions with radiotherapy, radiosurgery, proton therapy and brachytherapy. The Company also has Varian Particle Therapy (VPT) and the operations of the Ginzton Technology Center (GTC). Its VPT business develops, designs, manufactures, sells and services products and systems for delivering proton therapy, another form of external beam radiotherapy using proton beams for the treatment of cancer. Its ProBeam system is capable of delivering intensity modulated proton therapy (IMPT) using pencil beam scanning technology. Its ProBeam Compact is a single room proton therapy product.

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