FARO Technologies (NASDAQ: FARO) and Orbotech (NASDAQ:ORBK) are both small-cap computer and technology companies, but which is the superior business? We will compare the two businesses based on the strength of their earnings, analyst recommendations, risk, institutional ownership, valuation, dividends and profitabiliy.

Analyst Ratings

This is a breakdown of recent recommendations for FARO Technologies and Orbotech, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
FARO Technologies 0 0 4 0 3.00
Orbotech 0 1 5 0 2.83

FARO Technologies currently has a consensus target price of $40.67, indicating a potential upside of 4.01%. Orbotech has a consensus target price of $37.50, indicating a potential upside of 0.21%. Given FARO Technologies’ stronger consensus rating and higher probable upside, equities analysts clearly believe FARO Technologies is more favorable than Orbotech.

Risk & Volatility

FARO Technologies has a beta of 1.3, meaning that its stock price is 30% more volatile than the S&P 500. Comparatively, Orbotech has a beta of 0.79, meaning that its stock price is 21% less volatile than the S&P 500.

Profitability

This table compares FARO Technologies and Orbotech’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
FARO Technologies 1.98% 1.92% 1.54%
Orbotech 9.78% 14.87% 10.12%

Valuation & Earnings

This table compares FARO Technologies and Orbotech’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
FARO Technologies $331.40 million 1.97 $21.45 million $0.39 100.26
Orbotech $803.62 million 2.23 $154.54 million $1.65 22.68

Orbotech has higher revenue and earnings than FARO Technologies. Orbotech is trading at a lower price-to-earnings ratio than FARO Technologies, indicating that it is currently the more affordable of the two stocks.

Insider and Institutional Ownership

93.4% of FARO Technologies shares are owned by institutional investors. Comparatively, 71.5% of Orbotech shares are owned by institutional investors. 2.4% of FARO Technologies shares are owned by company insiders. Comparatively, 10.4% of Orbotech shares are owned by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company is poised for long-term growth.

Summary

Orbotech beats FARO Technologies on 9 of the 14 factors compared between the two stocks.

FARO Technologies Company Profile

FARO Technologies, Inc. designs, develops, manufactures, markets and supports software driven, three-dimensional (3D) measurement, imaging and realization systems. The Company operates in three segments: Factory Metrology, Construction BIM-CIM and Other. It sells its products through a direct sales force across customers in a range of manufacturing, industrial, architecture, surveying, building construction and law enforcement applications. Its FaroArm, FARO Laser ScanArm, FARO Gage, FARO Laser Tracker, FARO Cobalt Array 3D Imager AMP, and their companion CAM2 software provide for Computer-Aided Design-based inspection and/or factory-level statistical process control and surveying. It operates in international markets throughout the world and maintain sales offices in Australia, Brazil, Canada, China, India, Italy, Japan, Malaysia, Mexico, the Netherlands, Poland, Portugal, Singapore, South Korea, Spain, Switzerland, Thailand, Turkey, the United Kingdom, the United States and Vietnam.

Orbotech Company Profile

Orbotech Ltd. is a supplier of yield-enhancing and process-enabling solutions for the manufacture of electronics products. The Company provides cutting-edge solutions for use in the manufacture of printed circuit boards (PCBs), flat panel displays (FPDs) and semiconductor devices (SDs). The Company’s segments include Production Solutions for the Electronics Industry, Solar Energy and Recognition Software. The Production Solutions for the Electronics Industry segment is engaged in the design, development, manufacture, marketing and service of yield-enhancing and process-enabling solutions for the manufacture of electronics products. The Solar Energy segment is engaged in the design, development, manufacture and marketing of solar photovoltaic energy systems that produce electricity directly from sunlight. The Recognition Software segment is engaged in the development and marketing of check processing and healthcare payment automation solutions.

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