Critical Survey: Precision Optics (NASDAQ:POCI) & InMode (NASDAQ:INMD)

Precision Optics (NASDAQ:POCI) and InMode (NASDAQ:INMD) are both small-cap medical companies, but which is the superior stock? We will contrast the two companies based on the strength of their profitability, dividends, valuation, institutional ownership, analyst recommendations, earnings and risk.

Valuation and Earnings

This table compares Precision Optics and InMode”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Precision Optics	$19.10 million	1.65	-$2.95 million	($0.62)	-7.98
InMode	$394.82 million	3.33	$197.92 million	$2.35	8.04

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

Analyst Ratings

This is a summary of recent ratings for Precision Optics and InMode, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Precision Optics	0	0	0	0	0.00
InMode	0	4	2	0	2.33

InMode has a consensus price target of $23.00, indicating a potential upside of 21.76%. Given InMode’s stronger consensus rating and higher possible upside, analysts clearly believe InMode is more favorable than Precision Optics.

Profitability

This table compares Precision Optics and InMode’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%
InMode	45.91%	18.25%	16.33%

Insider and Institutional Ownership

13.7% of Precision Optics shares are held by institutional investors. Comparatively, 68.0% of InMode shares are held by institutional investors. 16.3% of Precision Optics shares are held by insiders. Comparatively, 6.9% of InMode shares are held by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Risk & Volatility

Precision Optics has a beta of 0.28, suggesting that its share price is 72% less volatile than the S&P 500. Comparatively, InMode has a beta of 2.13, suggesting that its share price is 113% more volatile than the S&P 500.

Summary

InMode beats Precision Optics on 13 of the 14 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 InMode

InMode Ltd. designs, develops, manufactures, and markets minimally invasive aesthetic medical products based on its proprietary radiofrequency assisted lipolysis and deep subdermal fractional radiofrequency technologies in the United States and internationally. The company offers minimally invasive aesthetic medical products for various procedures, such as liposuction with simultaneous skin tightening, body and face contouring, and ablative skin rejuvenation treatments, as well as for use in women's health conditions and procedures. It also designs, develops, manufactures, and markets non-invasive medical aesthetic products that target an array of procedures, including permanent hair reduction, facial skin rejuvenation, wrinkle reduction, cellulite treatment, skin appearance and texture, and superficial benign vascular and pigmented lesions, as well as hands-free medical aesthetic products that target a range of procedures, such as skin tightening, fat reduction, and muscle stimulation. The company was formerly known as Invasix Ltd. and changed its name to InMode Ltd. in November 2017. InMode Ltd. was incorporated in 2008 and is headquartered in Yokneam, Israel.