Nortech Systems (NSYS) & Varex Imaging (NASDAQ:VREX) Critical Review

Varex Imaging (NASDAQ:VREX) and Nortech Systems (NASDAQ:NSYS) are both small-cap medical companies, but which is the better business? We will compare the two companies based on the strength of their analyst recommendations, institutional ownership, profitability, valuation, risk, dividends and earnings.

Analyst Recommendations

This is a breakdown of recent recommendations for Varex Imaging and Nortech Systems, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Varex Imaging 0 1 2 0 2.67
Nortech Systems 0 0 0 0 N/A

Varex Imaging presently has a consensus target price of $32.00, indicating a potential upside of 5.02%. Given Varex Imaging’s higher probable upside, equities research analysts clearly believe Varex Imaging is more favorable than Nortech Systems.

Risk and Volatility

Varex Imaging has a beta of 1.61, indicating that its stock price is 61% more volatile than the S&P 500. Comparatively, Nortech Systems has a beta of 1.12, indicating that its stock price is 12% more volatile than the S&P 500.

Profitability

This table compares Varex Imaging and Nortech Systems’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Varex Imaging 2.45% 12.10% 5.18%
Nortech Systems -1.90% 1.00% 0.37%

Earnings and Valuation

This table compares Varex Imaging and Nortech Systems’ top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Varex Imaging $773.40 million 1.50 $27.50 million $1.30 23.44
Nortech Systems $112.33 million 0.10 -$2.44 million N/A N/A

Varex Imaging has higher revenue and earnings than Nortech Systems.

Institutional and Insider Ownership

96.8% of Varex Imaging shares are owned by institutional investors. Comparatively, 2.5% of Nortech Systems shares are owned by institutional investors. 2.4% of Varex Imaging shares are owned by company insiders. Comparatively, 6.2% of Nortech Systems 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.

Summary

Varex Imaging beats Nortech Systems on 10 of the 12 factors compared between the two stocks.

Varex Imaging Company Profile

Varex Imaging Corporation designs and manufactures X-ray imaging components. The company operates in two segments, Medical and Industrial. The Medical segment designs, manufactures, sells, and services X-ray imaging components comprising X-ray tubes, digital detectors, high voltage connectors, image-processing software and workstations, computer-aided diagnostic software, collimators, automatic exposure control devices, generators, ionization chambers, and buckys. This segment's products are used in a range of applications, including radiographic and fluoroscopic imaging, mammography, computed tomography, radiation therapy, oncology, cardiac, surgery, dental, and computer-aided detection. The Industrial segment designs, manufactures, sells, and services Linatron X-ray accelerators, X-ray tubes, digital detectors, high voltage connectors, and image-processing software for use in security and industrial inspection applications, such as airport security, cargo screening at ports and borders, and nondestructive examination in various applications. Varex Imaging Corporation sells its products through imaging system original equipment manufacturers, independent service companies, and distributors, as well as directly to end-users. The company has operations in North America, Latin America, Europe, Russia, the Middle East, India, Africa, Asia, and Australia. Varex Imaging Corporation is headquartered in Salt Lake City, Utah.

Nortech Systems Company Profile

Nortech Systems Incorporated operates as an electronic manufacturing services company in the United States, Mexico, and China. The company provides value-added engineering, technical and manufacturing, and support services, including project management, designing, testing, prototyping, supply chain management, and post-market services. It offers manufacturing and engineering services for medical devices, as well as printed circuit board, wire and cable, and higher level electromechanical assemblies. The company also provides repair services. It serves original equipment manufacturers in the aerospace and defense, medical, and industrial markets through business development teams and independent manufacturers' representatives. The company was founded in 1981 and is headquartered in Maple Grove, Minnesota.

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