Critical Analysis: MTS Systems (MTSC) versus Cutera (CUTR)

MTS Systems (NASDAQ: MTSC) and Cutera (NASDAQ:CUTR) are both small-cap computer and technology companies, but which is the superior stock? We will contrast the two businesses based on the strength of their analyst recommendations, institutional ownership, earnings, valuation, profitability, risk and dividends.

Risk and Volatility

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MTS Systems has a beta of 1.02, meaning that its share price is 2% more volatile than the S&P 500. Comparatively, Cutera has a beta of 0.45, meaning that its share price is 55% less volatile than the S&P 500.

Profitability

This table compares MTS Systems and Cutera’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
MTS Systems 7.22% 9.33% 3.39%
Cutera 19.80% 18.31% 11.39%

Insider and Institutional Ownership

99.0% of MTS Systems shares are owned by institutional investors. Comparatively, 95.3% of Cutera shares are owned by institutional investors. 1.8% of MTS Systems shares are owned by insiders. Comparatively, 11.6% of Cutera shares are owned by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.

Valuation and Earnings

This table compares MTS Systems and Cutera’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
MTS Systems $787.96 million 1.12 $25.08 million $2.22 22.43
Cutera $151.49 million 4.61 $29.99 million $0.77 66.75

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

Dividends

MTS Systems pays an annual dividend of $1.20 per share and has a dividend yield of 2.4%. Cutera does not pay a dividend. MTS Systems pays out 54.1% of its earnings in the form of a dividend.

Analyst Ratings

This is a summary of current ratings and price targets for MTS Systems and Cutera, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
MTS Systems 0 0 2 0 3.00
Cutera 0 1 4 0 2.80

MTS Systems currently has a consensus target price of $70.00, indicating a potential upside of 40.56%. Cutera has a consensus target price of $43.00, indicating a potential downside of 16.34%. Given MTS Systems’ stronger consensus rating and higher probable upside, research analysts plainly believe MTS Systems is more favorable than Cutera.

Summary

Cutera beats MTS Systems on 9 of the 16 factors compared between the two stocks.

MTS Systems Company Profile

MTS Systems Corporation is a supplier of test systems and position sensors. The Company operates through two segments: Test and Sensors. The Test segment provides testing solutions, including hardware, software and services to ground vehicles, materials and structures markets. The Sensors segment provides position sensors for a range of industrial and mobile hydraulic applications. The Sensors segment products are used by industrial machinery and mobile equipment manufacturers to automate the operation of their products for safety and end-user productivity. The Sensors segment manufactures products utilizing magnetostriction technology. Its technology, Temposonics, offers non-contact position sensing. Its Temposonics sensors provide position feedback for motion control systems. It also provides various service offerings, including calibration, maintenance, training and consulting. The Company has its manufacturing facilities in North America, Europe and Asia.

Cutera Company Profile

Cutera, Inc., a medical device company, designs, develops, manufactures, markets, and services laser and other energy based aesthetics systems worldwide. The company offers enlighten platform, a laser system that is used for tattoo removal, as well as for the treatment of benign pigmented lesions; excel HR platform, a hair removal solution for various skin types; and truSculpt, a high-powered radio frequency platform designed for deep tissue heating. It also provides excel V, a vascular and benign pigmented lesion treatment platform; and xeo platform, a multi-application platform on which a customer purchases hand piece applications for the removal of unwanted hair, treatment of vascular lesions, and skin rejuvenation by treating discoloration, fine lines, and laxity. In addition, the company offers GenesisPlus system, a laser product for use in the temporary increase of clear nails in patients with onychomycosis, as well as for the treatment of fine wrinkles, diffuse redness, and rosacea; solera console platform, including Opus and Titan consoles; and CoolGlide systems, as well as provides myQ, a third-party sourced system for the Japanese market. Further, it provides pulsed light hand pieces for the treatment of discoloration, hair removal, and vascular treatments; Pearl and Pearl Fractional hand pieces; skin care products; and post-warranty services through extended service contracts or direct billing, as well as offers Titan hand piece refills and marketing brochures through the Internet. The company markets and sells its products through direct sales force to plastic surgeons, dermatologists, gynecologists, family practitioners, primary care physicians, physicians performing aesthetic treatments in non-medical offices, and other qualified practitioners, as well as for physicians offering aesthetic treatments in non-medical offices. Cutera, Inc. was founded in 1998 and is headquartered in Brisbane, California.

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