Reviewing Data I/O (NASDAQ:DAIO) and Novanta (NASDAQ:NOVT)

Novanta (NASDAQ:NOVT) and Data I/O (NASDAQ:DAIO) are both computer and technology companies, but which is the superior business? We will compare the two businesses based on the strength of their analyst recommendations, earnings, institutional ownership, profitability, dividends, valuation and risk.

Profitability

This table compares Novanta and Data I/O’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Novanta	5.50%	14.53%	7.82%
Data I/O	-16.16%	-21.44%	-15.24%

Risk and Volatility

Novanta has a beta of 1.62, indicating that its stock price is 62% more volatile than the S&P 500. Comparatively, Data I/O has a beta of 1.08, indicating that its stock price is 8% more volatile than the S&P 500.

Analyst Ratings

This is a breakdown of recent ratings and recommmendations for Novanta and Data I/O, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Novanta	0	3	0	0	2.00
Data I/O	1	1	2	1	2.60

Novanta currently has a consensus target price of $133.00, suggesting a potential downside of 4.52%. Data I/O has a consensus target price of $5.11, suggesting a potential upside of 70.33%. Given Data I/O’s stronger consensus rating and higher possible upside, analysts clearly believe Data I/O is more favorable than Novanta.

Earnings & Valuation

This table compares Novanta and Data I/O”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Novanta	$949.24 million	5.25	$64.09 million	$1.47	94.76
Data I/O	$21.77 million	1.29	-$3.09 million	($0.40)	-7.50

Novanta has higher revenue and earnings than Data I/O. Data I/O is trading at a lower price-to-earnings ratio than Novanta, indicating that it is currently the more affordable of the two stocks.

Insider & Institutional Ownership

98.4% of Novanta shares are owned by institutional investors. Comparatively, 37.0% of Data I/O shares are owned by institutional investors. 1.2% of Novanta shares are owned by company insiders. Comparatively, 2.6% of Data I/O shares are owned by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Summary

Novanta beats Data I/O on 10 of the 15 factors compared between the two stocks.

About Novanta

Novanta, Inc. engages in the provision of core technology solutions to healthcare and advanced industrial original equipment manufacturers. It operates through the following segments: Photonics, Vision, and Precision Motion. The Photonics segment designs, manufactures, and markets photonics-based solutions, including laser scanning and laser beam delivery, CO2 laser, continuous wave and ultrafast laser, and optical light engine products. The Vision segment offers a range of medical grade technologies, including medical insufflators, pumps and related disposables, surgical displays and operating room integration technologies, optical data collection and machine vision technologies, radio frequency identification technologies, thermal printers, spectrometry technologies, and embedded touch screen solutions. The Precision Motion segment includes optical encoders, precision motor and motion control technology, air bearing spindles, and precision machined components to customers. The company was founded in 1968 and is headquartered in Bedford, MA.

About Data I/O

Data I/O Corporation, together with its subsidiaries, engages in the design, manufacture, and sale of programming and security deployment systems and services for electronic device manufacturers in the United States, Europe, and internationally. Its programming system products are used to program integrated circuits (ICs) with the specific data for the ICs. The company offers PSV handlers off-line automated programming systems, such as PSV2800 automated programming system which focuses on high-volume manufacturing in a lower cost platform; PSV7000 automated programming system for security deployment upgrades; PSV5000 automated programming system that combines mid-range capacity and supports security deployment; and PSV3500 automated programming system which provides basic programming needs. It also provides SentriX security deployment system; and LumenX and non-automated FlashPAK III programming systems. In addition, the company offers hardware support, system installation and repair, and device programming services. It markets and sells its products to original equipment manufacturers in automotive and consumer electronics, internet of things, and industrial, as well as electronic manufacturing service contract manufacturers through direct sales, and indirect sales representatives and distributors. Data I/O Corporation was incorporated in 1969 and is headquartered in Redmond, Washington.