Financial Review: EMCORE (NASDAQ:EMKR) vs. Netlist (NASDAQ:NLST)

EMCORE (NASDAQ:EMKR) and Netlist (OTCMKTS:NLST) 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 earnings, risk, institutional ownership, profitability, analyst recommendations, valuation and dividends.

Institutional & Insider Ownership

55.6% of EMCORE shares are held by institutional investors. Comparatively, 0.0% of Netlist shares are held by institutional investors. 1.4% of EMCORE shares are held by company insiders. Comparatively, 6.9% of Netlist shares are held by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock is poised for long-term growth.

Analyst Recommendations

This is a summary of current recommendations and price targets for EMCORE and Netlist, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
EMCORE 0 0 2 0 3.00
Netlist 0 1 0 0 2.00

EMCORE currently has a consensus price target of $4.85, indicating a potential upside of 38.57%. Netlist has a consensus price target of $0.30, indicating a potential downside of 58.33%. Given EMCORE’s stronger consensus rating and higher probable upside, analysts plainly believe EMCORE is more favorable than Netlist.

Valuation and Earnings

This table compares EMCORE and Netlist’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
EMCORE $87.26 million 1.18 -$35.98 million ($0.71) -4.93
Netlist $26.10 million 5.29 -$12.45 million ($0.08) -9.00

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

Profitability

This table compares EMCORE and Netlist’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
EMCORE -35.04% -26.92% -18.75%
Netlist -27.91% N/A -49.89%

Volatility and Risk

EMCORE has a beta of 0.84, meaning that its stock price is 16% less volatile than the S&P 500. Comparatively, Netlist has a beta of 0.91, meaning that its stock price is 9% less volatile than the S&P 500.

About EMCORE

EMCORE Corporation, together with its subsidiaries, provides advanced mixed-signal optics products in California. It offers broadband products comprising cable television; laser, receiver, and photodetector component products; radio frequency over glass FTTP products; satellite/microwave communications products; and wireless communications products. The company also provides chip devices products, including high-power gain chips, GPON fiber-to-the-premises, and data center chip products; and navigation systems products, such as fiber optic gyroscope products and inertial measurement units and navigation systems products. It sells its products through direct sales force, application engineers, third party sales representatives, and distributors. EMCORE Corporation was founded in 1984 and is headquartered in Alhambra, California.

About Netlist

Netlist, Inc. designs, manufactures, and sells modular memory subsystems for the server, high-performance computing, and communications markets worldwide. It offers Hybri dual in-line memory module (DIMM), a storage class memory product, which unifies dynamic random access memory (DRAM)and NAND flash in a plug-and-play module delivering terabyte storage capacities operating at nanosecond memory speeds. The company also provides nonvolatile (NV) memory products, such as EXPRESSvault PCIe, a plug-and-play memory card, which offers data acceleration and data protection for server appliances; NVvault DDR3 NVDIMM comprising data acceleration and data protection in a joint electron device engineering council (JEDEC)standard DD3 interface for integration into industry-standard server and storage solutions; NVvault DDR4 NVDIMM, which provides data acceleration and data protection in a JEDEC standard DDR4 interface; and specialty DIMMs and embedded flash products for use in data center and industrial applications. In addition, it resells Samsung products; and sells component inventory of DRAM ICs and NAND flash to distributors and other users of memory integrated circuits. The company markets and sells its products primarily to original equipment manufacturers through a direct sales force and a network of independent sales representatives. Netlist, Inc. was founded in 2000 and is headquartered in Irvine, California.

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