Contrasting Steris (STE) & STAAR Surgical (NASDAQ:STAA)

STAAR Surgical (NASDAQ: STAA) and Steris (NYSE:STE) are both healthcare companies, but which is the better stock? We will compare the two businesses based on the strength of their valuation, earnings, analyst recommendations, institutional ownership, profitability, dividends and risk.

Profitability

This table compares STAAR Surgical and Steris’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
STAAR Surgical -2.47% -3.34% -1.93%
Steris 9.42% 11.57% 6.80%

Risk and Volatility

STAAR Surgical has a beta of 1.25, suggesting that its share price is 25% more volatile than the S&P 500. Comparatively, Steris has a beta of 1.22, suggesting that its share price is 22% more volatile than the S&P 500.

Analyst Ratings

This is a breakdown of recent recommendations for STAAR Surgical and Steris, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
STAAR Surgical 0 0 2 0 3.00
Steris 0 2 3 0 2.60

STAAR Surgical currently has a consensus price target of $20.50, suggesting a potential upside of 33.55%. Steris has a consensus price target of $80.25, suggesting a potential downside of 6.22%. Given STAAR Surgical’s stronger consensus rating and higher probable upside, equities research analysts clearly believe STAAR Surgical is more favorable than Steris.

Insider & Institutional Ownership

77.8% of STAAR Surgical shares are held by institutional investors. Comparatively, 89.6% of Steris shares are held by institutional investors. 5.6% of STAAR Surgical shares are held by insiders. Comparatively, 2.6% of Steris shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Valuation & Earnings

This table compares STAAR Surgical and Steris’ revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
STAAR Surgical $82.43 million 7.66 -$12.12 million ($0.05) -307.00
Steris $2.61 billion 2.78 $109.96 million $2.85 30.02

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

Dividends

Steris pays an annual dividend of $1.24 per share and has a dividend yield of 1.4%. STAAR Surgical does not pay a dividend. Steris pays out 43.5% of its earnings in the form of a dividend. Steris has increased its dividend for 8 consecutive years.

Summary

Steris beats STAAR Surgical on 11 of the 17 factors compared between the two stocks.

STAAR Surgical Company Profile

STAAR Surgical Company designs, develops, manufactures and sells implantable lenses for the eye and delivery systems used to deliver the lenses into the eye. It operates in the ophthalmic surgical market segment. Its principal products are intraocular lenses used in cataract surgery and implantable collamer lenses used in refractive surgery. It makes lenses used across the world in corrective or refractive surgery, and makes lenses for use in surgery that treats cataracts. Its refractive surgery corrects the types of visual disorders that glasses or contact lenses have treated (myopia, hyperopia, astigmatism and presbyopia). Its refractive surgery corrects the types of visual disorders that glasses or contact lenses have treated (myopia, hyperopia, astigmatism and presbyopia). As of December 30, 2016, it sold its products in more than 60 countries, with direct distribution in the United States, Canada, Japan and Spain, and independent distribution in the remainder of the world.

Steris Company Profile

STERIS plc provides infection prevention and other procedural products and services. The Company operates through four segments: Healthcare Products, which offers infection prevention and procedural solutions for healthcare providers, including capital equipment and related maintenance, and installation services, as well as consumables; Healthcare Specialty Services, which provides a range of specialty services for healthcare providers, including hospital sterilization services, instrument and scope repairs, and linen management; Life Sciences, which offers capital equipment and consumable products, and equipment maintenance and specialty services for pharmaceutical manufacturers and research facilities, and Applied Sterilization Technologies, which offers contract sterilization and laboratory services for medical device and pharmaceutical customers and others. Its Corporate and other segment includes the Defense and Industrial business unit.

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