Reviewing IPG Photonics (NASDAQ:IPGP) & nLight (NASDAQ:LASR)

nLight (NASDAQ:LASR) and IPG Photonics (NASDAQ:IPGP) are both mid-cap technology companies, but which is the better investment? We will contrast the two businesses based on the strength of their profitability, analyst recommendations, earnings, valuation, institutional ownership, risk and dividends.

Institutional & Insider Ownership

83.9% of nLight shares are held by institutional investors. Comparatively, 93.8% of IPG Photonics shares are held by institutional investors. 3.1% of nLight shares are held by insiders. Comparatively, 37.5% of IPG Photonics shares are held by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock will outperform the market over the long term.

Earnings & Valuation

This table compares nLight and IPG Photonics”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
nLight	$317.72 million	7.56	-$23.47 million	($0.23)	-179.35
IPG Photonics	$1.00 billion	2.87	$31.10 million	$0.94	72.11

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

Analyst Ratings

This is a summary of current recommendations and price targets for nLight and IPG Photonics, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
nLight	1	0	9	2	3.00
IPG Photonics	1	2	7	0	2.60

nLight presently has a consensus target price of $82.06, suggesting a potential upside of 98.92%. IPG Photonics has a consensus target price of $131.33, suggesting a potential upside of 93.76%. Given nLight’s stronger consensus rating and higher probable upside, analysts clearly believe nLight is more favorable than IPG Photonics.

Volatility and Risk

nLight has a beta of 2.46, suggesting that its share price is 146% more volatile than the S&P 500. Comparatively, IPG Photonics has a beta of 1, suggesting that its share price has a similar volatility profile to the S&P 500.

Profitability

This table compares nLight and IPG Photonics’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
nLight	-4.02%	-1.03%	-0.85%
IPG Photonics	3.65%	3.91%	3.42%

Summary

IPG Photonics beats nLight on 9 of the 15 factors compared between the two stocks.

About nLight

nLIGHT, Inc. develops and manufactures lasers and related photonics products for industrial, aerospace and defense applications. Its offerings include high-power semiconductor lasers, fiber lasers and ultrafast lasers, along with components and systems used to deliver and control laser energy. The company’s products support applications such as materials processing and other industrial tasks, as well as defense technologies including directed-energy systems. nLIGHT serves customers in the United States and international markets.

About IPG Photonics

IPG Photonics develops and manufactures fiber lasers, diode lasers, and optical amplifiers. Its products are used in materials processing applications such as cutting, welding, marking, and engraving, as well as in medical, communications, and other advanced applications. Founded in 1990 by physicist Valentin Gapontsev, the company helped establish fiber lasers as an alternative to other industrial laser technologies. IPG Photonics is headquartered in Oxford, Massachusetts, and serves customers around the world through its international operations and sales network.