Critical Analysis: Tactile Systems Technology (NASDAQ:TCMD) and Covalon Technologies (OTCMKTS:CVALF)

Tactile Systems Technology (NASDAQ:TCMD) and Covalon Technologies (OTCMKTS:CVALF) are both small-cap medical companies, but which is the superior investment? We will compare the two companies based on the strength of their profitability, analyst recommendations, risk, institutional ownership, dividends, valuation and earnings.

Earnings & Valuation

This table compares Tactile Systems Technology and Covalon Technologies”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Tactile Systems Technology	$292.98 million	1.01	$16.96 million	$0.62	21.34
Covalon Technologies	$22.91 million	2.03	$1.96 million	$0.05	33.98

Tactile Systems Technology has higher revenue and earnings than Covalon Technologies. Tactile Systems Technology is trading at a lower price-to-earnings ratio than Covalon Technologies, indicating that it is currently the more affordable of the two stocks.

Risk & Volatility

Tactile Systems Technology has a beta of 0.96, indicating that its share price is 4% less volatile than the S&P 500. Comparatively, Covalon Technologies has a beta of 0.63, indicating that its share price is 37% less volatile than the S&P 500.

Profitability

This table compares Tactile Systems Technology and Covalon Technologies’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Tactile Systems Technology	5.06%	7.72%	5.59%
Covalon Technologies	7.00%	7.79%	6.84%

Analyst Recommendations

This is a breakdown of current ratings and price targets for Tactile Systems Technology and Covalon Technologies, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Tactile Systems Technology	0	4	0	1	2.40
Covalon Technologies	0	0	0	0	0.00

Tactile Systems Technology presently has a consensus price target of $13.50, indicating a potential upside of 2.04%. Given Tactile Systems Technology’s stronger consensus rating and higher possible upside, equities analysts plainly believe Tactile Systems Technology is more favorable than Covalon Technologies.

Insider & Institutional Ownership

83.4% of Tactile Systems Technology shares are held by institutional investors. 2.5% of Tactile Systems Technology shares are held by 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

Tactile Systems Technology beats Covalon Technologies on 9 of the 14 factors compared between the two stocks.

About Tactile Systems Technology

Tactile Systems Technology, Inc., a medical technology company, develops and provides medical devices to treat underserved chronic diseases in the United States. It offers Flexitouch Plus system, a pneumatic compression device for the treatment of lymphedema in the home setting; and Entre Plus System, a portable pneumatic compression device for the at-home treatment of venous disorders, such as lymphedema and chronic venous insufficiency, including venous leg ulcers. The company also provides Kylee, a mobile application to help patients learn about lymphedema, track their symptoms, and treatment, as well as to share their progress with their doctor; and AffloVest, a portable high frequency chest wall oscillation vest to treat patients with retained pulmonary secretions resulting from bronchiectasis, cystic fibrosis, and various neuromuscular disorders. Tactile Systems Technology, Inc. was incorporated in 1995 and is headquartered in Minneapolis, Minnesota.

About Covalon Technologies

Covalon Technologies Ltd. engages in the research, development, manufacturing, and marketing of medical products in infection management, advanced wound care, and surgical procedure areas in the United States, Canada, the Middle East, Asia, Latin America, and internationally. The company’s platform technologies comprise collagen matrix platform that is used to manufacture a family of products to treat chronic and infected wounds, including diabetic ulcers, pressure ulcers, venous ulcers, donor and graft sites, traumatic wounds healing by secondary intention, dehisced surgical wounds, and first and second degree burns; and antimicrobial silicone adhesive platform, which is used for family of pre and post-surgical, and vascular access products that are designed to kill bacteria or yeast that comes into contact with the antimicrobial silicone providing broad-spectrum antimicrobial activity. It also offers medical coating platform, a process that utilizes photo-polymerization to create active grafting sites where new polymer chains are initiated and propagated from the surface of an existing medical device. In addition, the company provides wound care dressings; surgical and peri-operative; and infection management products. It offers its products under the Covalon brand name through third-party distribution networks and company’s direct sales force. The company serves hospitals, wound care centers, burn centers, extended/alternate care and acute care facilities, home health care agencies, and physicians’ offices. Covalon Technologies Ltd. is headquartered in Mississauga, Canada.