Analyzing Varex Imaging (NASDAQ:VREX) and Biomerica (NASDAQ:BMRA)

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

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Varex Imaging	2.55%	9.19%	4.13%
Biomerica	-115.50%	-142.81%	-77.83%

Volatility and Risk

Varex Imaging has a beta of 0.97, suggesting that its share price is 3% less volatile than the S&P 500. Comparatively, Biomerica has a beta of 0.38, suggesting that its share price is 62% less volatile than the S&P 500.

Earnings and Valuation

This table compares Varex Imaging and Biomerica”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Varex Imaging	$844.60 million	0.92	-$70.30 million	$0.52	35.39
Biomerica	$4.45 million	1.19	-$3.78 million	($1.64)	-1.05

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

Institutional and Insider Ownership

22.3% of Biomerica shares are owned by institutional investors. 4.6% of Varex Imaging shares are owned by company insiders. Comparatively, 12.3% of Biomerica shares are owned by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Analyst Recommendations

This is a breakdown of recent recommendations and price targets for Varex Imaging and Biomerica, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Varex Imaging	0	7	0	0	2.00
Biomerica	1	0	0	0	1.00

Varex Imaging presently has a consensus price target of $16.88, suggesting a potential downside of 8.31%. Biomerica has a consensus price target of $9.00, suggesting a potential upside of 423.56%. Given Biomerica’s higher probable upside, analysts clearly believe Biomerica is more favorable than Varex Imaging.

Summary

Varex Imaging beats Biomerica on 8 of the 13 factors compared between the two stocks.

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.

About Biomerica

Biomerica, Inc., a biomedical technology company, develops, patents, manufactures, and markets diagnostic and therapeutic products for the detection and/or treatment of medical conditions and diseases worldwide. The company's diagnostic test kits are used to analyze blood, urine, nasal or fecal specimens from patients in the diagnosis of various diseases, food intolerances, and other medical complications; or to measure bacteria, hormones, antibodies, antigens, or other substances which may exist in the human body, stools, or blood in extremely small concentrations. It primarily sells its products for gastrointestinal diseases, food intolerances, and various esoteric tests at the physicians' offices and over-the-counter drugstores, and hospital/clinical laboratories. The company is also developing InFoods IBS, that uses a simple blood sample to identify patient-specific foods which may alleviate irritable bowel syndrome symptoms; and H. Pylori diagnostic test that indicates if a patient is infected with the H. Pylori bacteria. In addition, it develops products to indicate if a person has been infected by COVID-19. Biomerica, Inc. was incorporated in 1971 and is headquartered in Irvine, California.