Head-To-Head Analysis: Arch Therapeutics (OTCMKTS:ARTH) vs. Surmodics (NASDAQ:SRDX)

Surmodics (NASDAQ:SRDX) and Arch Therapeutics (OTCMKTS:ARTH) are both small-cap medical companies, but which is the better stock? We will contrast the two companies based on the strength of their institutional ownership, analyst recommendations, profitability, risk, dividends, earnings and valuation.

Analyst Recommendations

This is a summary of recent ratings and target prices for Surmodics and Arch Therapeutics, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Surmodics	0	0	2	0	3.00
Arch Therapeutics	0	0	0	0	N/A

Surmodics presently has a consensus target price of $59.50, suggesting a potential upside of 76.14%. Given Surmodics’ higher probable upside, analysts plainly believe Surmodics is more favorable than Arch Therapeutics.

Institutional and Insider Ownership

87.1% of Surmodics shares are owned by institutional investors. Comparatively, 94.0% of Arch Therapeutics shares are owned by institutional investors. 7.5% of Surmodics shares are owned by company insiders. Comparatively, 4.5% of Arch Therapeutics shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock is poised for long-term growth.

Profitability

This table compares Surmodics and Arch Therapeutics’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Surmodics	-17.58%	-8.34%	-5.26%
Arch Therapeutics	-16,959.23%	N/A	-281.18%

Valuation & Earnings

This table compares Surmodics and Arch Therapeutics’ revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Surmodics	$99.95 million	4.78	-$27.27 million	($1.65)	-20.47
Arch Therapeutics	$20,000.00	355.35	-$5.28 million	N/A	N/A

Arch Therapeutics has lower revenue, but higher earnings than Surmodics.

Volatility and Risk

Surmodics has a beta of 1.14, suggesting that its share price is 14% more volatile than the S&P 500. Comparatively, Arch Therapeutics has a beta of 0.65, suggesting that its share price is 35% less volatile than the S&P 500.

Summary

Surmodics beats Arch Therapeutics on 7 of the 11 factors compared between the two stocks.

About Surmodics

Surmodics, Inc., together with its subsidiaries, provides performance coating technologies for intravascular medical devices, and chemical and biological components for in vitro diagnostic immunoassay tests and microarrays in the United States and internationally. It operates in two segments, Medical Device and In Vitro Diagnostics (IVD). The Medical Device segment engages in the provision of surface modification coating technologies to enhance access, deliverability, and predictable deployment of medical devices; and drug-delivery coating technologies to provide site-specific drug-delivery from the surface of a medical device for coronary, peripheral, neuro-vascular and structural heart, and other markets, as well as manufacturing of vascular intervention medical devices, including drug-coated balloons, mechanical thrombectomy devices, and radial access balloon catheters and guide sheaths. The IVD segment develops, manufactures, and sells chemical and biological components for in vitro diagnostic immunoassay and molecular tests, as well as diagnostic and biomedical research markets. This segment offers protein stabilizers, substrates, surface coatings, and antigens. The company was founded in 1979 and is headquartered in Eden Prairie, Minnesota.

About Arch Therapeutics

Arch Therapeutics, Inc., together with its subsidiaries, operates as a biotechnology company in the United States. The company develops and markets products based on its AC5 self-assembling technology platform to stop bleeding and control leaking, as well as manages wounds during surgery, trauma, and interventional care or from disease. Its flagship products include AC5 advanced wound system and AC5 topical hemostat, which are intended for skin applications, such as management of complicated chronic wounds or acute surgical wounds. The company was founded in 2006 and is based in Framingham, Massachusetts.