Analyzing Arch Therapeutics (ARTH) & K2M Group (KTWO)

K2M Group (NASDAQ:KTWO) and Arch Therapeutics (OTCMKTS:ARTH) are both small-cap medical companies, but which is the superior business? We will compare the two businesses based on the strength of their earnings, dividends, risk, institutional ownership, profitability, analyst recommendations and valuation.

Volatility & Risk

K2M Group has a beta of 1.61, indicating that its share price is 61% more volatile than the S&P 500. Comparatively, Arch Therapeutics has a beta of 0.7, indicating that its share price is 30% less volatile than the S&P 500.

Insider and Institutional Ownership

0.0% of Arch Therapeutics shares are held by institutional investors. 6.0% of K2M Group shares are held by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.

Valuation and Earnings

This table compares K2M Group and Arch Therapeutics’ revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
K2M Group $258.03 million 4.63 -$37.14 million ($0.87) -31.47
Arch Therapeutics N/A N/A -$7.78 million N/A N/A

Arch Therapeutics has lower revenue, but higher earnings than K2M Group.

Profitability

This table compares K2M Group and Arch Therapeutics’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
K2M Group -14.49% -16.27% -10.15%
Arch Therapeutics N/A -254.30% -115.86%

Analyst Ratings

This is a summary of recent recommendations and price targets for K2M Group and Arch Therapeutics, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
K2M Group 0 7 4 0 2.36
Arch Therapeutics 0 0 4 0 3.00

K2M Group presently has a consensus target price of $26.00, suggesting a potential downside of 5.04%. Arch Therapeutics has a consensus target price of $3.00, suggesting a potential upside of 672.80%. Given Arch Therapeutics’ stronger consensus rating and higher possible upside, analysts plainly believe Arch Therapeutics is more favorable than K2M Group.

K2M Group Company Profile

K2M Group Holdings, Inc., a medical device company, provides spine and minimally invasive solutions in the United States and internationally. The company offers implants, disposables, and instruments primarily to hospitals for use by spine surgeons to treat spinal pathologies, such as deformity, trauma, and tumor. Its complex spine products include EVEREST, MESA, and MESA 2 deformity spinal systems; NILE alternative and proximal fixation spinal systems; MESA rail deformity spinal systems; Cricket spinal correction rod reduction instrumentation; CAPRI corpectomy cage systems; MESA small stature, rail small stature, and mini spinal systems; SERENGETI complex spine minimally invasive retractor systems; RAVINE complex spine lateral access systems; SANTORINI corpectomy cage systems; YUKON OCT spinal systems; and PALO ALTO cervical static corpectomy cage systems. The company's minimally invasive surgery products consist of EVEREST minimally invasive spinal and XT spinal, SERENGETI minimally invasive retractor, MOJAVE PL 3D expandable interbody, RAVINE lateral access, CASCADIA lateral 3D interbody, ALEUTIAN lateral interbody, and TERRA NOVA minimally invasive access systems. In addition, its degenerative spine products comprise EVEREST degenerative spinal, CASCADIA and ALEUTIAN interbody, SAHARA AL expandable stabilization, RHINE cervical disc, CHESAPEAKE interbody, PYRENEES cervical plate, and BLUE RIDGE hybrid cervical plate systems. Further, the company provides Balance ACS, a platform that includes tools to assist surgeons with obtaining authorization from healthcare insurers. K2M Group Holdings, Inc. markets and sells its products through direct sales employees, independent sales agencies, and distributor partners. The company was founded in 2004 and is headquartered in Leesburg, Virginia.

Arch Therapeutics Company Profile

Arch Therapeutics, Inc., operates as a biotechnology company in the United States. The company develops products based on its technology to stop bleeding and control leaking, as well as provides other advantages during surgery, trauma, and interventional care. Its primary product candidate is AC5 Devices, a synthetic biocompatible peptides that comprises naturally occurring amino acids to achieve hemostasis in minimally invasive and open surgical procedures. The company was founded in 2006 and is based in Framingham, Massachusetts.

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