Critical Review: K2M Group Holdings (KTWO) versus MiMedx Group (MDXG)

K2M Group Holdings (NASDAQ: KTWO) and MiMedx Group (NASDAQ:MDXG) are both small-cap medical companies, but which is the better stock? We will contrast the two businesses based on the strength of their analyst recommendations, earnings, dividends, profitability, institutional ownership, risk and valuation.

Volatility & Risk

K2M Group Holdings has a beta of 1.43, meaning that its stock price is 43% more volatile than the S&P 500. Comparatively, MiMedx Group has a beta of 0.91, meaning that its stock price is 9% less volatile than the S&P 500.

Valuation & Earnings

This table compares K2M Group Holdings and MiMedx Group’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
K2M Group Holdings $248.68 million 3.43 -$2.00 million ($0.96) -20.51
MiMedx Group $283.32 million 4.80 $32.97 million $0.31 40.90

MiMedx Group has higher revenue and earnings than K2M Group Holdings. K2M Group Holdings is trading at a lower price-to-earnings ratio than MiMedx Group, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares K2M Group Holdings and MiMedx Group’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
K2M Group Holdings -16.21% -15.45% -10.50%
MiMedx Group 11.64% 17.49% 12.69%

Institutional & Insider Ownership

99.1% of K2M Group Holdings shares are held by institutional investors. Comparatively, 60.6% of MiMedx Group shares are held by institutional investors. 5.8% of K2M Group Holdings shares are held by company insiders. Comparatively, 12.4% of MiMedx Group shares are held by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Analyst Ratings

This is a breakdown of current ratings and recommmendations for K2M Group Holdings and MiMedx Group, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
K2M Group Holdings 0 0 9 0 3.00
MiMedx Group 1 0 4 0 2.60

K2M Group Holdings presently has a consensus target price of $25.25, indicating a potential upside of 28.24%. MiMedx Group has a consensus target price of $16.00, indicating a potential upside of 26.18%. Given K2M Group Holdings’ stronger consensus rating and higher possible upside, equities research analysts clearly believe K2M Group Holdings is more favorable than MiMedx Group.

Summary

MiMedx Group beats K2M Group Holdings on 8 of the 13 factors compared between the two stocks.

K2M Group Holdings Company Profile

K2M Group Holdings, Inc. is a medical device company focused on designing, developing and commercializing spine and minimally invasive technologies and techniques. The Company’s solutions are focused on achieving three-dimensional Total Body Balance. Its spine products are used by spine surgeons to treat spinal pathologies, such as deformity (primarily scoliosis), trauma and tumor. Its products consist of implants, disposables and instruments, which are marketed and sold primarily to hospitals for use by spine surgeons. As of December 31, 2016, its product portfolio consisted of 83 product lines that are used in complex spine, minimally invasive surgery (MIS) and degenerative surgeries. Its technologies include EVEREST, MESA, Rail 4D, Quicket Deformity, CASCADIA, CAPRI, SERENGETI, RAVINE and tifix. Its degenerative spine technologies are used to treat degenerative spine disorders and include products, such as cervical, thoracic and lumbar spinal fusion devices and interbody devices.

MiMedx Group Company Profile

MiMedx Group, Inc. is an integrated developer, processor and marketer of regenerative biomaterial products and bioimplants human placental tissue, skin and bone. The Company’s Regenerative Biomaterials segment includes the design, manufacture, and marketing of products and tissue processing services for the Wound Care, Surgical, Sports Medicine, Ophthalmic and Dental market categories. Its biomaterial platform technologies include AmnioFix, EpiFix, OrthoFlo, Physio, AlloBurn, and CollaFix. AmnioFix and EpiFix are its tissue technologies processed from human amniotic membrane derived from donated placentas. OrthoFlo is amniotic fluid-derived allograft for homologous use. Physio is a bone grafting material consists of bone tissue with no added carrier. CollaFix, its new brand, is its collagen fiber technology designed to mimic the natural composition, structure and mechanical properties of musculoskeletal tissues in order to augment their repair.

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