EXFO (NASDAQ: EXFO) and ESCO Technologies (NYSE:ESE) are both testing & measuring equipment companies, but which is the superior stock? We will contrast the two businesses based on the strength of their analyst recommendations, valuation, dividends, risk, profitability, earnings and institutional ownership.

Analyst Recommendations

This is a breakdown of recent ratings and target prices for EXFO and ESCO Technologies, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
EXFO 0 4 1 0 2.20
ESCO Technologies 0 0 3 0 3.00

EXFO presently has a consensus target price of $5.35, suggesting a potential upside of 30.49%. ESCO Technologies has a consensus target price of $66.50, suggesting a potential upside of 12.43%. Given EXFO’s higher probable upside, equities research analysts clearly believe EXFO is more favorable than ESCO Technologies.

Valuation & Earnings

This table compares EXFO and ESCO Technologies’ top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio NetIncome Earnings Per Share Price/Earnings Ratio
EXFO $243.30 million 0.92 $850,000.00 $0.01 410.00
ESCO Technologies $571.46 million 2.67 $45.88 million $1.98 29.87

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

Risk and Volatility

EXFO has a beta of 0.43, indicating that its stock price is 57% less volatile than the S&P 500. Comparatively, ESCO Technologies has a beta of 1.01, indicating that its stock price is 1% more volatile than the S&P 500.

Institutional and Insider Ownership

17.0% of EXFO shares are owned by institutional investors. Comparatively, 95.2% of ESCO Technologies shares are owned by institutional investors. 20.0% of EXFO shares are owned by insiders. Comparatively, 2.3% of ESCO Technologies shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Profitability

This table compares EXFO and ESCO Technologies’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
EXFO 0.35% 5.26% 3.99%
ESCO Technologies 8.06% 8.36% 4.84%

Dividends

ESCO Technologies pays an annual dividend of $0.32 per share and has a dividend yield of 0.5%. EXFO does not pay a dividend. ESCO Technologies pays out 16.2% of its earnings in the form of a dividend.

Summary

ESCO Technologies beats EXFO on 13 of the 16 factors compared between the two stocks.

EXFO Company Profile

EXFO Inc is a Canada-based company, which provides communications service providers (CSPs) and data center, cloud and Web-scale operators with field test, service assurance and analytics solutions to ensure the deployment, maintenance and management of physical, virtual, fixed and mobile networks. It focuses on network infrastructures: fourth generation (4G)/long-term evolution (LTE), wireless backhaul, small cells and distributed antenna systems (DAS), 100G network upgrades and fiber-to-the-home (FTTH)/fiber-to-the-curb (FTTC)/fiber-to-the-node (FTTN) deployments. It offers a range of wire line and wireless tests, service assurance and analytics solutions to the global telecommunications industry. Its products include TestFlow; LTB-8 platform; a family of optical time domain reflect meters (OTDRs); iSAM; MaxTester-940 Fiber Certifier optical loss test set (OLTS) for data center and enterprise markets, and the G.fast handheld test set.

ESCO Technologies Company Profile

ESCO Technologies Inc. (ESCO) is a producer of engineered products and systems sold to customers for utility, industrial, aerospace and commercial applications. The Company operates through four segments: Filtration/Fluid Flow (Filtration), RF Shielding and Test (Test), Utility Solutions Group (USG) and Technical Packaging. The filtration segment’s activities are managed by its subsidiaries, Crissair, Inc. (Crissair), PTI Technologies Inc. (PTI), VACCO Industries (VACCO) and Westland Technologies Inc. (Westland). The Test segment activities are managed by its subsidiaries, Beijing Lindgren ElectronMagnetic Technology Co., Ltd., ETS-Lindgren Inc. and ETS-Lindgren OY. The USG segment activities are managed by its subsidiaries, including Doble Engineering Company, Doble PowerTest Ltd and Doble TransiNor AS. The technical packaging activities are managed by its subsidiaries, Thermoform Engineered Quality LLC (TEQ), Plastique Limited and Plastique Sp. z o.o.

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