TearLab Corporation (NASDAQ: TEAR) and LightPath Technologies (NASDAQ:LPTH) are both small-cap medical companies, but which is the superior investment? We will contrast the two businesses based on the strength of their analyst recommendations, institutional ownership, profitabiliy, valuation, dividends, earnings and risk.

Volatility & Risk

TearLab Corporation has a beta of 2.59, meaning that its share price is 159% more volatile than the S&P 500. Comparatively, LightPath Technologies has a beta of -0.59, meaning that its share price is 159% less volatile than the S&P 500.

Analyst Recommendations

This is a summary of recent ratings and price targets for TearLab Corporation and LightPath Technologies, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
TearLab Corporation 0 1 4 0 2.80
LightPath Technologies 0 0 2 0 3.00

TearLab Corporation currently has a consensus price target of $5.75, indicating a potential upside of 217.68%. LightPath Technologies has a consensus price target of $3.00, indicating a potential upside of 11.52%. Given TearLab Corporation’s higher probable upside, equities research analysts plainly believe TearLab Corporation is more favorable than LightPath Technologies.

Insider & Institutional Ownership

29.8% of TearLab Corporation shares are owned by institutional investors. Comparatively, 27.7% of LightPath Technologies shares are owned by institutional investors. 11.6% of TearLab Corporation shares are owned by insiders. Comparatively, 17.1% of LightPath Technologies shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Earnings and Valuation

This table compares TearLab Corporation and LightPath Technologies’ revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
TearLab Corporation $27.95 million 0.37 -$9.93 million ($3.33) -0.54
LightPath Technologies $24.09 million 2.69 $5.66 million $0.09 29.89

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

Profitability

This table compares TearLab Corporation and LightPath Technologies’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
TearLab Corporation -61.14% N/A -60.70%
LightPath Technologies 6.94% 12.48% 7.58%

Summary

LightPath Technologies beats TearLab Corporation on 8 of the 13 factors compared between the two stocks.

About TearLab Corporation

TearLab Corporation is an in-vitro diagnostic company. The Company has commercialized a tear testing platform, the TearLab Osmolarity System, which enables eye care practitioners to test for sensitive and specific biomarkers using nanoliters of tear film at the point-of-care. The Company, through its subsidiary TearLab Research, Inc., develops technologies to enable eye care practitioners to test a range of biomarkers (chemistries, metabolites, genes and proteins) at the point-of-care. Its product, the TearLab Osmolarity System, enables the measurement of tear osmolarity in the doctor’s office. The TearLab Osmolarity System consists of approximately three components: the TearLab disposable, the TearLab Pen, and the TearLab Reader. The TearLab disposable is a single-use microfluidic microchip. The TearLab Pen is a hand-held device that interfaces with the TearLab disposable. The TearLab Reader is a small desktop unit that allows for the docking of the TearLab Pen.

About LightPath Technologies

LightPath Technologies, Inc. is a manufacturer and integrator of families of precision molded aspheric optics, fiber-optic collimator, GRADIUM glass lenses and other optical materials used to produce products that manipulate light. The Company designs, develops, manufactures and distributes optical components and assemblies utilizing the optical processes and manufacturing technologies. The Company also performs research and development for optical solutions for the traditional optics markets and communications markets. The Company’s products are incorporated into a range of applications by its customers in various industries, including defense products, medical devices, laser aided industrial tools, automotive safety applications, barcode scanners, optical data storage, hybrid fiber coax datacom, telecommunications, machine vision and sensors.

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