Sono-Tek (NASDAQ:SOTK – Get Free Report) and Art’s-Way Manufacturing (NASDAQ:ARTW – Get Free Report) are both small-cap industrials companies, but which is the superior investment? We will contrast the two businesses based on the strength of their institutional ownership, dividends, analyst recommendations, profitability, risk, earnings and valuation.
Risk & Volatility
Sono-Tek has a beta of 0.07, suggesting that its share price is 93% less volatile than the S&P 500. Comparatively, Art’s-Way Manufacturing has a beta of 1.06, suggesting that its share price is 6% more volatile than the S&P 500.
Insider & Institutional Ownership
47.9% of Sono-Tek shares are owned by institutional investors. Comparatively, 2.9% of Art’s-Way Manufacturing shares are owned by institutional investors. 5.6% of Sono-Tek shares are owned by insiders. Comparatively, 51.5% of Art’s-Way Manufacturing shares are owned by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.
Profitability
This table compares Sono-Tek and Art’s-Way Manufacturing’s net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| Sono-Tek | 9.32% | 9.95% | 7.81% |
| Art’s-Way Manufacturing | -1.65% | -3.06% | -1.72% |
Earnings and Valuation
This table compares Sono-Tek and Art’s-Way Manufacturing”s top-line revenue, earnings per share (EPS) and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| Sono-Tek | $20.91 million | 4.64 | $1.81 million | $0.12 | 51.33 |
| Art’s-Way Manufacturing | $22.98 million | 0.72 | $1.03 million | ($0.09) | -35.11 |
Sono-Tek has higher earnings, but lower revenue than Art’s-Way Manufacturing. Art’s-Way Manufacturing is trading at a lower price-to-earnings ratio than Sono-Tek, indicating that it is currently the more affordable of the two stocks.
Analyst Recommendations
This is a summary of recent ratings for Sono-Tek and Art’s-Way Manufacturing, as provided by MarketBeat.com.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| Sono-Tek | 0 | 1 | 1 | 0 | 2.50 |
| Art’s-Way Manufacturing | 1 | 0 | 0 | 0 | 1.00 |
Sono-Tek presently has a consensus target price of $8.50, suggesting a potential upside of 37.99%. Given Sono-Tek’s stronger consensus rating and higher possible upside, analysts clearly believe Sono-Tek is more favorable than Art’s-Way Manufacturing.
Summary
Sono-Tek beats Art’s-Way Manufacturing on 10 of the 13 factors compared between the two stocks.
About Sono-Tek
Sono-Tek Corporation designs and manufactures ultrasonic coating systems for applying on parts and components for the microelectronics/electronics, alternative energy, medical, industrial, and research and development/other markets worldwide. The company also designs and manufactures custom-engineered ultrasonic coating systems; and provides nozzles and generators for manufacturers' equipment. Its products include integrated multi-axis coating systems, integrated coating systems, fluxing systems, OEM systems, and other related systems. In addition, the company provides surface coating solutions and application consulting services. It markets and distributes its products through direct sales personnel, select independent distributors, and sales representatives. The company was incorporated in 1975 and is based in Milton, New York.
About Art’s-Way Manufacturing
Art’s-Way Manufacturing Co., Inc. manufactures and distributes farm equipment products. It operates through the Agricultural Products, and Modular Buildings segments. The Agricultural Products segment manufactures a variety of specialized farm machinery under its own label including portable and stationary animal feed processing equipment and related attachments used to mill and mix feed grains into custom animal feed rations, a line of forage equipment consisting of forage boxes, bale processors, running gear, and dump boxes, a line of manure spreaders, sugar beet harvesting equipment, and a line of dirt work equipment. The Modular Buildings segment produces and sells modular buildings, which are custom designed to meet the specific research needs of its customers. It also provides services relating to the design, manufacturing, delivery, installation and renting of the building units that it produces. The company was founded by Arthur Luscombe in 1956 and is headquartered in Armstrong, IA.
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