Lantronix (NASDAQ: LTRX) and Harmonic (NASDAQ:HLIT) are both small-cap computer and technology companies, but which is the superior investment? We will compare the two businesses based on the strength of their institutional ownership, dividends, earnings, risk, valuation, profitability and analyst recommendations.

Analyst Recommendations

This is a breakdown of current ratings for Lantronix and Harmonic, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Lantronix 0 0 1 0 3.00
Harmonic 0 2 2 0 2.50

Lantronix currently has a consensus target price of $4.00, indicating a potential upside of 101.01%. Harmonic has a consensus target price of $5.33, indicating a potential upside of 24.03%. Given Lantronix’s stronger consensus rating and higher possible upside, equities research analysts clearly believe Lantronix is more favorable than Harmonic.

Risk & Volatility

Lantronix has a beta of -0.2, suggesting that its stock price is 120% less volatile than the S&P 500. Comparatively, Harmonic has a beta of 1.04, suggesting that its stock price is 4% more volatile than the S&P 500.

Earnings & Valuation

This table compares Lantronix and Harmonic’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Lantronix $44.73 million 0.80 -$270,000.00 ($0.05) -39.80
Harmonic $405.91 million 0.86 -$72.31 million ($1.02) -4.22

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

Profitability

This table compares Lantronix and Harmonic’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Lantronix -1.83% 2.39% 1.64%
Harmonic -22.02% -13.06% -6.02%

Insider & Institutional Ownership

16.7% of Lantronix shares are owned by institutional investors. Comparatively, 96.0% of Harmonic shares are owned by institutional investors. 52.4% of Lantronix shares are owned by company insiders. Comparatively, 5.5% of Harmonic shares are owned by company 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.

Summary

Lantronix beats Harmonic on 8 of the 13 factors compared between the two stocks.

About Lantronix

Lantronix, Inc. is a provider of secure data access and management solutions for Internet of things (IoT) and information technology (IT) assets. The Company organizes its products and solutions into three product lines, including IoT, IT Management and Other. Its IoT products consist of IoT Gateways and IoT Building Blocks. The Company’s IT Management product line includes console management, power management and keyboard video mouse (KVM), products that provide remote out-of-band management (OOBM) access to IT and networking infrastructure deployed in test labs, data centers and server rooms. Its Other product line includes non-focus products, such as the xPrintServer, xSenso and WiBox. Its connectivity solutions serves a range of industries, including data center, medical, security, environmental and government. The Company conducts its business in approximately three geographic regions, including the Americas; Europe, Middle East and Africa (EMEA), and Asia Pacific Japan (APJ).

About Harmonic

Harmonic Inc. (Harmonic) designs, manufactures and sells video infrastructure products, and system solutions. The Company has two segments: Video and Cable Edge. Harmonic provides technical support and professional services to its customers around the world. The Video segment sells video processing and production, and playout solutions and services to broadcast and media companies, streaming media companies, cable operators, and satellite and telecommunications (telco), and pay television (TV) service providers. Its Cable Edge business sells cable edge solutions and related services to cable operators around the world. The Video segment offers a range of products and solutions, as well as software-based media processing platforms. The Company’s Narrowcast Services Gateway (NSG) products are integrated edge gateway products that integrate routing, multiplexing, scrambling and modulation into a single package for the delivery of narrowcast services to subscribers over cable networks.

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