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

Profitability

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

Net Margins Return on Equity Return on Assets
TESSCO Technologies 0.38% 2.35% 1.41%
Harmonic -21.58% -13.22% -6.31%

Dividends

TESSCO Technologies pays an annual dividend of $0.80 per share and has a dividend yield of 5.9%. Harmonic does not pay a dividend. TESSCO Technologies pays out 320.0% 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 breakdown of current ratings and recommmendations for TESSCO Technologies and Harmonic, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
TESSCO Technologies 0 0 0 0 N/A
Harmonic 0 2 1 0 2.33

Harmonic has a consensus price target of $5.67, suggesting a potential upside of 41.67%. Given Harmonic’s higher probable upside, analysts clearly believe Harmonic is more favorable than TESSCO Technologies.

Insider & Institutional Ownership

59.7% of TESSCO Technologies shares are held by institutional investors. Comparatively, 98.1% of Harmonic shares are held by institutional investors. 26.9% of TESSCO Technologies shares are held by insiders. Comparatively, 4.3% of Harmonic shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock is poised for long-term growth.

Volatility and Risk

TESSCO Technologies has a beta of 1.25, suggesting that its share price is 25% more volatile than the S&P 500. Comparatively, Harmonic has a beta of 0.93, suggesting that its share price is 7% less volatile than the S&P 500.

Earnings and Valuation

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

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
TESSCO Technologies $544.45 million 0.21 $6.91 million $0.25 54.40
Harmonic $379.77 million 0.85 -$14.91 million ($1.03) -3.88

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

Summary

TESSCO Technologies beats Harmonic on 9 of the 14 factors compared between the two stocks.

About TESSCO Technologies

TESSCO Technologies Incorporated architects and delivers the product and value chain solutions to organizations responsible for building, operating, maintaining and reselling cellular, mobile communications, wireless-fidelity (Wi-Fi), machine-to-machine, Internet of Things and wireless backhaul systems. The Company provides marketing and sales services, knowledge and supply chain management, product-solution delivery and control systems utilizing Internet and information technology. Its customers include a diversified mix of carrier and public network operators, tower owners, program managers, contractors and integrators, wireless Internet service providers, industrial and enterprise self-maintained users (including railroads, utilities, mining operators, oil and gas operators and technicians), governments, manufacturers, value-added resellers, tier 1, 2 and 3 retail carrier stores and their independent agents, dealers and consumers, as well as other local and national retailers.

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.

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