Based on the aggregated intelligence of 120,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, medical device maker Natus Medical (NASDAQ:BABY) has earned a coveted five-star ranking. Our data has shown that five-star stocks outperform the market by a significant margin; conversely, one-star stocks have woefully lagged the market average.

With that in mind, let's take a closer look at Natus Medical's business, and see what CAPS investors are saying about the stock right now.

Natus facts

Headquarters (Founded)

San Carlos, California (1987)

Market Cap

$448 million


Health-care equipment

TTM Revenue

$152.67 million


CEO James Hawkins (since 2004)
CFO Steven Murphy (since 2003)

Return on Capital (average last three years)



Boston Scientific (NYSE:BSX)

CAPS members bullish on BABY also bullish on

Nuance Communications (NASDAQ:NUAN)

CAPS members bearish on BABY also bearish on

Research In Motion (NASDAQ:RIMM)

Sources: Capital IQ, a division of Standard & Poor's, and Motley Fool CAPS. TTM = trailing 12 months.

Over on CAPS, 1,303 of the 1,333 members who have rated Natus -- some 98% -- believe the stock will outperform the S&P 500 going forward. These bulls include CAPS All-Star shoaly and Astromac.

Last week, shoaly brought attention to Natus' latest earnings report (and subsequent price drop): "I love when companies miss by a penny and stocks are sold off 10%. This is no 'Baby' of an opportunity folks so pick up some shares on the cheap!"

A pitch from Astromac a week earlier shares that bullish sentiment, elaborating on management's long-term expansion strategy:

Natus' primary products serve a solid growth industry--newborn hearing testing. Roughly half of their revenue relies on capital purchases from hospitals--a potential weak spot given most hospitals weak cash positions in this economy. However, they are focusing their revenue growth on disposable products which bring recurring revenue that is largely safe even in economic downturns.

They have an excellent cash position with $76M in cash at the end of the last quarter and cash from operations of $14M/year.

What do you think about Natus, or any other stock for that matter? Make your voice heard on Motley Fool CAPS today. More than 120,000 investors are waiting to hear what you have to say. CAPS is 100% free, so simply click here to get started.

Fool contributor Brian Pacampara owns no position in any of the companies mentioned. Natus and Nuance Communications are Motley Fool Hidden Gems picks. Apple is a  Stock Advisor selection, and Google is a choice of Rule Breakers. The Fool's disclosure policy always gets a perfect score.