LSI Industries (NASDAQ: LYTS) and Research Frontiers (NASDAQ:REFR) are both small-cap construction companies, but which is the better business? We will compare the two businesses based on the strength of their risk, valuation, institutional ownership, earnings, dividends, profitabiliy and analyst recommendations.

Valuation & Earnings

This table compares LSI Industries and Research Frontiers’ top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
LSI Industries $328.82 million 0.69 $15.88 million $0.15 59.80
Research Frontiers $1.22 million 24.04 -$3.85 million ($0.17) -7.18

LSI Industries has higher revenue and earnings than Research Frontiers. Research Frontiers is trading at a lower price-to-earnings ratio than LSI Industries, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares LSI Industries and Research Frontiers’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
LSI Industries 1.13% 3.77% 2.83%
Research Frontiers -329.10% -73.50% -67.03%

Dividends

LSI Industries pays an annual dividend of $0.20 per share and has a dividend yield of 2.2%. Research Frontiers does not pay a dividend. LSI Industries pays out 133.3% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Analyst Ratings

This is a summary of current ratings and recommmendations for LSI Industries and Research Frontiers, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
LSI Industries 0 0 2 0 3.00
Research Frontiers 0 1 1 0 2.50

LSI Industries currently has a consensus target price of $12.50, suggesting a potential upside of 39.35%. Research Frontiers has a consensus target price of $4.00, suggesting a potential upside of 227.87%. Given Research Frontiers’ higher probable upside, analysts plainly believe Research Frontiers is more favorable than LSI Industries.

Volatility and Risk

LSI Industries has a beta of 1.57, indicating that its stock price is 57% more volatile than the S&P 500. Comparatively, Research Frontiers has a beta of 0.28, indicating that its stock price is 72% less volatile than the S&P 500.

Insider & Institutional Ownership

77.5% of LSI Industries shares are owned by institutional investors. Comparatively, 19.6% of Research Frontiers shares are owned by institutional investors. 5.4% of LSI Industries shares are owned by insiders. Comparatively, 11.6% of Research Frontiers shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.

Summary

LSI Industries beats Research Frontiers on 11 of the 15 factors compared between the two stocks.

LSI Industries Company Profile

LSI Industries Inc. is a provider of corporate visual image solutions to the petroleum/convenience store industry. The Company designs and develops aspects of the solid-state light emitting diode (LED) lighting, from the electronic circuit board, to the software to drive and control the LEDs, to the structure of the LED product. It operates through three segments: Lighting, Graphics and Technology. The Lighting Segment manufactures and markets outdoor and indoor lighting and lighting controls for the commercial, industrial and multi-site retail markets, including the quick-service and automotive markets. The Graphics Segment manufactures and sells exterior and interior visual image elements related to signage and graphics, including integrated digital solutions. The Technology Segment designs, engineers, and manufactures electronic circuit boards, assemblies, lighting controls and large format solid state LED video displays. The Company provides a range of lighting control solutions.

Research Frontiers Company Profile

Research Frontiers Incorporated (Research Frontiers) is engaged in the development and marketing of technology and devices to control the flow of light. The Company develops and licenses its patented suspended particle device (SPD-Smart) light-control technology to other companies that manufacture and market either the SPD-Smart chemical emulsion, light-control film made from the chemical emulsion, lamination services, electronics to power end-products incorporating the film, or the end-products themselves, such as smart windows, skylights and sunroofs. Research Frontiers has approximately 40 companies that, in the aggregate, are licensed to serve over four SPD-Smart application areas, including aerospace, architectural, automotive and marine products. Its VariGuard business unit markets and sells SPD-Smart products directly to customers for specialty uses, such as the protection of artwork and light-sensitive documents in museums and private collections.

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