NVE Corporation (NASDAQ: NVEC) and Electro Scientific Industries (NASDAQ:ESIO) are both small-cap computer and technology companies, but which is the superior business? We will contrast the two companies based on the strength of their dividends, profitability, analyst recommendations, risk, valuation, institutional ownership and earnings.

Institutional & Insider Ownership

71.5% of NVE Corporation shares are held by institutional investors. Comparatively, 73.2% of Electro Scientific Industries shares are held by institutional investors. 2.3% of NVE Corporation shares are held by company insiders. Comparatively, 6.2% of Electro Scientific Industries 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.

Volatility & Risk

NVE Corporation has a beta of 1.22, meaning that its stock price is 22% more volatile than the S&P 500. Comparatively, Electro Scientific Industries has a beta of 0.63, meaning that its stock price is 37% less volatile than the S&P 500.

Dividends

NVE Corporation pays an annual dividend of $4.00 per share and has a dividend yield of 4.7%. Electro Scientific Industries does not pay a dividend. NVE Corporation pays out 149.8% 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 Recommendations

This is a breakdown of recent recommendations for NVE Corporation and Electro Scientific Industries, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
NVE Corporation 0 1 0 0 2.00
Electro Scientific Industries 0 0 2 0 3.00

NVE Corporation currently has a consensus price target of $79.00, suggesting a potential downside of 7.69%. Electro Scientific Industries has a consensus price target of $13.25, suggesting a potential downside of 18.11%. Given NVE Corporation’s higher possible upside, equities research analysts clearly believe NVE Corporation is more favorable than Electro Scientific Industries.

Valuation and Earnings

This table compares NVE Corporation and Electro Scientific Industries’ revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
NVE Corporation $29.23 million 14.17 $18.97 million $2.67 32.05
Electro Scientific Industries $186.04 million 2.88 $2.78 million ($1.05) -15.41

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

Profitability

This table compares NVE Corporation and Electro Scientific Industries’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
NVE Corporation 44.85% 14.11% 13.91%
Electro Scientific Industries -18.49% -22.18% -15.53%

Summary

NVE Corporation beats Electro Scientific Industries on 9 of the 15 factors compared between the two stocks.

NVE Corporation Company Profile

NVE Corporation develops and sells devices that use spintronics, a nanotechnology that relies on electron spin to acquire, store and transmit information. The Company manufactures spintronic products, including sensors and couplers that are used to acquire and transmit data. The Company has also licensed its spintronic magnetoresistive random access memory technology (MRAM). Its parts are found in industrial, scientific, and medical applications. The Company’s products include sensors, couplers and MRAM products. Its sensor products detect the strength or gradient of magnetic fields and are used to determine position or speed. Its spintronic couplers combine a GMR sensor element and an IsoLoop integrated microscopic coil. MRAM uses spintronics to store data. It combines the speed of static random-access memory (SRAM), the density of dynamic random-access memory (DRAM) and the nonvolatility of flash memory. Data is stored in the spin of the electrons in thin metal alloy films.

Electro Scientific Industries Company Profile

Electro Scientific Industries, Inc. and its subsidiaries supply laser-based manufacturing solutions for industries reliant on microtechnologies. The Company operates through two segments: Component Processing and Micromachining. The Component Processing segment includes interconnect products, semiconductor products and component products. The interconnect, semiconductor and component products are sold to manufacturers of electronic components and are used to drill, cut, trim, ablate and test and mark features for the functionality of the component. The Micromachining segment includes products that are sold to manufacturers of end devices across various industries and are used to drill, cut or mark features on a range of materials, generally on the casing or external surface of the end device. Its integrated solutions allow industrial designers and process engineers to control the power of laser light to transform materials. It has operations in Asia, Europe and North America.

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