Critical Contrast: Harmonic (HLIT) and Lantronix (NASDAQ:LTRX)

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

Earnings and Valuation

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

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Harmonic $405.91 million 0.84 -$72.31 million ($1.01) -4.16
Lantronix $44.73 million 0.81 -$270,000.00 ($0.05) -40.40

Lantronix has lower revenue, but higher earnings 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.

Insider and Institutional Ownership

96.0% of Harmonic shares are owned by institutional investors. Comparatively, 16.5% of Lantronix shares are owned by institutional investors. 4.3% of Harmonic shares are owned by insiders. Comparatively, 52.4% of Lantronix shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.

Analyst Ratings

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

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

Harmonic presently has a consensus target price of $5.33, indicating a potential upside of 26.98%. Lantronix has a consensus target price of $4.00, indicating a potential upside of 98.02%. Given Lantronix’s stronger consensus rating and higher probable upside, analysts clearly believe Lantronix is more favorable than Harmonic.

Volatility & Risk

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

Profitability

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

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

Summary

Lantronix beats Harmonic on 8 of the 14 factors compared between the two stocks.

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.

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).

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