Sierra Wireless (NASDAQ: SWIR) and Clearfield (NASDAQ:CLFD) are both small-cap computer and technology companies, but which is the better business? We will contrast the two companies based on the strength of their institutional ownership, risk, earnings, profitability, dividends, valuation and analyst recommendations.

Institutional & Insider Ownership

25.3% of Sierra Wireless shares are held by institutional investors. Comparatively, 28.3% of Clearfield shares are held by institutional investors. 2.0% of Sierra Wireless shares are held by company insiders. Comparatively, 18.3% of Clearfield shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Profitability

This table compares Sierra Wireless and Clearfield’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Sierra Wireless 3.48% 9.32% 6.03%
Clearfield 5.20% 5.94% 5.49%

Earnings & Valuation

This table compares Sierra Wireless and Clearfield’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio NetIncome Earnings Per Share Price/Earnings Ratio
Sierra Wireless $615.61 million 1.03 $15.38 million $0.72 27.29
Clearfield $73.95 million 2.34 $3.85 million $0.28 44.29

Sierra Wireless has higher revenue and earnings than Clearfield. Sierra Wireless is trading at a lower price-to-earnings ratio than Clearfield, 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 Sierra Wireless and Clearfield, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Sierra Wireless 0 9 2 0 2.18
Clearfield 0 0 2 0 3.00

Sierra Wireless currently has a consensus target price of $26.30, suggesting a potential upside of 33.84%. Clearfield has a consensus target price of $15.50, suggesting a potential upside of 25.00%. Given Sierra Wireless’ higher possible upside, equities research analysts plainly believe Sierra Wireless is more favorable than Clearfield.

Volatility & Risk

Sierra Wireless has a beta of 3.21, indicating that its stock price is 221% more volatile than the S&P 500. Comparatively, Clearfield has a beta of 1.26, indicating that its stock price is 26% more volatile than the S&P 500.

Summary

Sierra Wireless beats Clearfield on 7 of the 13 factors compared between the two stocks.

About Sierra Wireless

Sierra Wireless, Inc. is engaged in building the Internet of Things (IoT) with wireless solutions for organizations. The Company’s OEM Solution segment offers cellular embedded wireless modules for IoT connectivity, including an embedded application framework to support customer applications. The Company’s Enterprise Solution segment offers intelligent routers and gateways, including management tools and applications that enable cellular connectivity. The Company’s Cloud and Connectivity Services segment offers a cloud based platform for deploying and managing IoT applications, Smart SIM supported by mobile core networks, and managed wireless broadband services to enable customer IoT deployments. The Company offers a portfolio of second generation, third generation, and fourth generation cellular embedded wireless modules and gateways, integrated with its secure cloud and connectivity services. The Company offers its products to original equipment manufacturers (OEMs) and enterprises.

About Clearfield

Clearfield, Inc. manufactures, markets and sells fiber management and enclosure platform that consolidates, distributes and protects fiber as it moves from the inside plant to the outside plant and all the way to the home, business and cell site. The Company’s products include Clearview Cassette, which is the building block of its product platform; Connectivity and Optical Components; FieldSmart, which is a series of panels, cabinets, wall boxes and other enclosures that house the Clearview components; FieldShield, which is a fiber delivery method for broadband deployment; CraftSmart, which is a line of optical protection field enclosures, and Cable Assemblies. Its products are sold across broadband service providers, including traditional telephone companies, competitive local exchange carriers, multiple service operators (cable television), wireless service providers, and municipal-owned utilities that utilize fiber in their service offerings to businesses and consumers.

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