Critical Contrast: Accuray (ARAY) versus 3M (MMM)

Accuray (NASDAQ:ARAY) and 3M (NYSE:MMM) are both medical companies, but which is the better business? We will contrast the two companies based on the strength of their valuation, risk, dividends, analyst recommendations, profitability, institutional ownership and earnings.

Dividends

3M pays an annual dividend of $5.44 per share and has a dividend yield of 2.6%. Accuray does not pay a dividend. 3M pays out 59.3% of its earnings in the form of a dividend. 3M has increased its dividend for 59 consecutive years.

Valuation and Earnings

This table compares Accuray and 3M’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Accuray $404.90 million 0.88 -$23.89 million ($0.28) -14.64
3M $31.66 billion 3.82 $4.86 billion $9.17 22.67

3M has higher revenue and earnings than Accuray. Accuray is trading at a lower price-to-earnings ratio than 3M, indicating that it is currently the more affordable of the two stocks.

Analyst Ratings

This is a breakdown of recent ratings and price targets for Accuray and 3M, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Accuray 1 3 1 0 2.00
3M 2 6 6 0 2.29

Accuray presently has a consensus price target of $5.48, suggesting a potential upside of 33.54%. 3M has a consensus price target of $217.77, suggesting a potential upside of 4.74%. Given Accuray’s higher possible upside, research analysts clearly believe Accuray is more favorable than 3M.

Volatility & Risk

Accuray has a beta of 1.6, meaning that its stock price is 60% more volatile than the S&P 500. Comparatively, 3M has a beta of 1.18, meaning that its stock price is 18% more volatile than the S&P 500.

Institutional & Insider Ownership

85.4% of Accuray shares are owned by institutional investors. Comparatively, 66.2% of 3M shares are owned by institutional investors. 3.4% of Accuray shares are owned by insiders. Comparatively, 0.6% of 3M shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.

Profitability

This table compares Accuray and 3M’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Accuray -5.79% -42.24% -5.17%
3M 13.79% 54.60% 15.73%

Summary

3M beats Accuray on 11 of the 16 factors compared between the two stocks.

Accuray Company Profile

Accuray Incorporated designs, develops, and sells radiosurgery and radiation therapy systems for the treatment of tumors in the body. The company offers the CyberKnife System, a robotic stereotactic radiosurgery and stereotactic body radiation therapy system used for the treatment of various types of cancer and tumors in the body. The CyberKnife System automatically tracks, detects, and corrects for tumor and patient movement in real-time during the procedure, as well as enables the delivery of precise, high dose radiation while patients breathe normally. It also offers the TomoTherapy System, which consists of an integrated and versatile radiation therapy system used for the treatment of a range of cancer types. The company markets its products in the United States directly, as well as through a sales agent and group purchasing organizations; and directly and through distributors and sales agents in Europe, Japan and other countries of Asia, South America, and internationally to hospitals and stand-alone treatment facilities. Accuray Incorporated was incorporated in 1990 and is headquartered in Sunnyvale, California.

3M Company Profile

3M Company operates as a diversified technology company worldwide. The company's Industrial segment offers tapes; coated, non-woven, and bonded abrasives; adhesives; ceramics; sealants; specialty materials; purification products; closure systems for personal hygiene products; acoustic systems products; automotive components; and abrasion-resistant films, and paint finishing and detailing products. Its Safety and Graphics Business segment provides personal protection products, transportation safety products, commercial graphics systems, commercial cleaning and protection products, floor matting, roofing granules for asphalt shingles, and fall protection products. The company's Health Care segment offers medical and surgical supplies, skin health and infection prevention products, inhalation and transdermal drug delivery systems, dental and orthodontic products, health information systems, and food safety products. Its Electronics and Energy segment provides optical films; packaging and interconnection devices; insulating and splicing solutions; touch screens and touch monitors; renewable energy component solutions; and infrastructure protection products. The company's Consumer segment offers sponges, scouring pads, high-performance cloths, repositionable notes, indexing systems, home improvement and care products, and protective materials; and consumer and office tapes and adhesives. It serves automotive, electronics and automotive electrification, appliance, paper and printing, packaging, food and beverage, construction, medical clinics and hospitals, pharmaceuticals, dental and orthodontic practitioners, health information systems, food manufacturing and testing, consumer and office retail, office business to business, home improvement, drug and pharmacy retail, and other markets directly, as well as through wholesalers, retailers, jobbers, distributors, and dealers. The company was founded in 1902 and is headquartered in St. Paul, Minnesota.

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