Reviewing TransMedics Group (NASDAQ:TMDX) and Precision Optics (NASDAQ:POCI)

Precision Optics (NASDAQ:POCI) and TransMedics Group (NASDAQ:TMDX) are both medical companies, but which is the superior investment? We will compare the two companies based on the strength of their risk, analyst recommendations, earnings, valuation, profitability, dividends and institutional ownership.

Analyst Recommendations

This is a breakdown of recent recommendations for Precision Optics and TransMedics Group, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Precision Optics	0	0	0	0	0.00
TransMedics Group	0	2	8	1	2.91

TransMedics Group has a consensus price target of $131.80, suggesting a potential upside of 67.73%. Given TransMedics Group’s stronger consensus rating and higher possible upside, analysts clearly believe TransMedics Group is more favorable than Precision Optics.

Volatility and Risk

Precision Optics has a beta of 0.21, indicating that its share price is 79% less volatile than the S&P 500. Comparatively, TransMedics Group has a beta of 2.08, indicating that its share price is 108% more volatile than the S&P 500.

Earnings and Valuation

This table compares Precision Optics and TransMedics Group”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Precision Optics	$18.98 million	1.70	-$2.95 million	($0.62)	-8.19
TransMedics Group	$241.62 million	10.91	-$25.03 million	$0.94	83.60

Precision Optics has higher earnings, but lower revenue than TransMedics Group. Precision Optics is trading at a lower price-to-earnings ratio than TransMedics Group, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Precision Optics and TransMedics Group’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Precision Optics	-20.01%	-35.51%	-21.67%
TransMedics Group	8.14%	18.74%	4.39%

Institutional and Insider Ownership

13.7% of Precision Optics shares are owned by institutional investors. Comparatively, 99.7% of TransMedics Group shares are owned by institutional investors. 16.3% of Precision Optics shares are owned by insiders. Comparatively, 7.0% of TransMedics Group shares are owned 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.

Summary

TransMedics Group beats Precision Optics on 13 of the 15 factors compared between the two stocks.

About Precision Optics

Precision Optics Corporation, Inc. designs, develops, manufactures, and sells specialized optical and illumination systems and related components primarily in the United States and the European Economic Area. It offers medical instrumentation products, including endoscopes and endocouplers, as well as other custom imaging and illumination products, such as Microprecision lenses and micro medical cameras, and 3D endoscopes for use in minimally invasive surgical procedures by hospitals and physicians. The company also provides components and assemblies for industrial and military use. It markets its products to medical device companies. The company was incorporated in 1982 and is based in Gardner, Massachusetts.

About TransMedics Group

TransMedics Group, Inc., a commercial-stage medical technology company, engages in transforming organ transplant therapy for end-stage organ failure patients in the United States and internationally. The company offers Organ Care System (OCS), a portable organ perfusion, optimization, and monitoring system that utilizes its proprietary and customized technology to replicate near-physiologic conditions for donor organs outside of the human body. Its OCS includes OCS LUNG for the preservation of standard criteria donor lungs for double-lung transplantation; OCS Heart, a technology for preservation of DBD donor hearts deemed unsuitable due to limitations of cold storage and for ex vivo reanimation, functional monitoring, and beating-heart preservation of donation-after-circulatory-death hearts; and OCS Liver for the preservation of DBD and DCD of donor livers. The company also developed national OCS program, a turnkey solution for outsourced organ retrieval; and provides OCS organ management and logistics services, including aviation and ground transportation, and other coordination activity. The company was founded in 1998 and is headquartered in Andover, Massachusetts.