Financial Analysis: TearLab (TEAR) and LightPath Technologies (LPTH)

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

Insider & Institutional Ownership

12.2% of TearLab shares are owned by institutional investors. Comparatively, 32.6% of LightPath Technologies shares are owned by institutional investors. 12.0% of TearLab shares are owned by company insiders. Comparatively, 12.7% of LightPath Technologies shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock is poised for long-term growth.

Analyst Ratings

This is a summary of recent ratings and target prices for TearLab and LightPath Technologies, as reported by MarketBeat.

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

TearLab currently has a consensus price target of $5.75, indicating a potential upside of 812.70%. LightPath Technologies has a consensus price target of $2.80, indicating a potential upside of 14.29%. Given TearLab’s higher possible upside, analysts plainly believe TearLab is more favorable than LightPath Technologies.

Earnings and Valuation

This table compares TearLab and LightPath Technologies’ top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
TearLab $28.01 million 0.13 -$19.92 million ($3.10) -0.20
LightPath Technologies $28.37 million 2.12 $7.70 million $0.31 7.90

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

Volatility and Risk

TearLab has a beta of 2.92, suggesting that its share price is 192% more volatile than the S&P 500. Comparatively, LightPath Technologies has a beta of -0.63, suggesting that its share price is 163% less volatile than the S&P 500.

Profitability

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

Net Margins Return on Equity Return on Assets
TearLab -60.22% N/A -75.54%
LightPath Technologies 25.13% 31.44% 19.09%

Summary

LightPath Technologies beats TearLab on 9 of the 12 factors compared between the two stocks.

About TearLab

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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