Critical Contrast: SemiLEDS (NASDAQ:LEDS) versus SCI Engineered Materials (OTCMKTS:SCIA)

SCI Engineered Materials (OTCMKTS:SCIA) and SemiLEDS (NASDAQ:LEDS) are both small-cap computer and technology companies, but which is the superior stock? We will compare the two businesses based on the strength of their institutional ownership, analyst recommendations, dividends, profitability, valuation, risk and earnings.

Institutional and Insider Ownership

27.6% of SCI Engineered Materials shares are held by institutional investors. Comparatively, 76.3% of SemiLEDS shares are held by institutional investors. 19.7% of SCI Engineered Materials shares are held by insiders. Comparatively, 57.4% of SemiLEDS shares are held by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Profitability

This table compares SCI Engineered Materials and SemiLEDS’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
SCI Engineered Materials	9.13%	11.23%	9.05%
SemiLEDS	-1.59%	-17.38%	-2.92%

Volatility & Risk

SCI Engineered Materials has a beta of 0.82, meaning that its share price is 18% less volatile than the S&P 500. Comparatively, SemiLEDS has a beta of 1, meaning that its share price has a similar volatility profile to the S&P 500.

Analyst Ratings

This is a summary of current ratings and target prices for SCI Engineered Materials and SemiLEDS, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
SCI Engineered Materials	0	0	0	0	0.00
SemiLEDS	1	0	0	0	1.00

Earnings and Valuation

This table compares SCI Engineered Materials and SemiLEDS”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
SCI Engineered Materials	$22.87 million	0.95	$1.86 million	$0.35	13.57
SemiLEDS	$31.11 million	0.54	-$2.04 million	($0.15)	-13.70

SCI Engineered Materials has higher earnings, but lower revenue than SemiLEDS. SemiLEDS is trading at a lower price-to-earnings ratio than SCI Engineered Materials, indicating that it is currently the more affordable of the two stocks.

Summary

SCI Engineered Materials beats SemiLEDS on 7 of the 12 factors compared between the two stocks.

About SCI Engineered Materials

SCI Engineered Materials, Inc. engages in the manufacture and supply of materials for physical vapor deposition thin film applications in the United States. It offers ceramic targets, metal sputtering targets, and backing plates for use in semiconductors, thin film solar, flat panel displays, defense, aerospace, and photonics industries. The company’s materials are used to produce nano layers of metals and oxides for advanced material systems; and in applying decorative coatings for end uses, such as sink faucets to produce various electronic, photonic, and semiconductor products. It serves domestic and multi-national corporations, universities, and research institutions. The company was formerly known as Superconductive Components, Inc. and changed its name to SCI Engineered Materials, Inc. in 2007. SCI Engineered Materials, Inc. was incorporated in 1987 and is headquartered in Columbus, Ohio.

About SemiLEDS

SemiLEDs Corporation develops, manufactures, and sells light emitting diode (LED) chips, LED components, and LED modules and systems in the United States, Taiwan, the Netherlands, Germany, Japan, and internationally. The company also sells enhanced vertical, LED product series in blue, white, green, and UV; LED chips to packagers or distributors; and lighting products primarily to original design manufacturers of lighting products and the end-users of lighting devices, as well as packs and sells its LED chips. Its products are used for general lighting applications, including commercial, industrial, and residential lighting; and specialty industrial applications, such as ultraviolet or UV, curing of polymers, LED light therapy in medical/cosmetic applications, counterfeit detection, germicidal and viricidal devices LED lighting for horticulture applications, architectural lighting, and entertainment lighting. The company was incorporated in 2005 and is based in Chu-Nan, Taiwan.