Oclaro (NASDAQ: OCLR) and Digi International (NASDAQ:DGII) 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 risk, valuation, institutional ownership, earnings, dividends, profitability and analyst recommendations.
Volatility and Risk
Oclaro has a beta of 1.32, meaning that its stock price is 32% more volatile than the S&P 500. Comparatively, Digi International has a beta of 1.45, meaning that its stock price is 45% more volatile than the S&P 500.
This table compares Oclaro and Digi International’s revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|Oclaro||$600.97 million||1.97||$127.85 million||$0.89||7.88|
|Digi International||$181.63 million||1.46||$9.36 million||$0.35||28.43|
Oclaro has higher revenue and earnings than Digi International. Oclaro is trading at a lower price-to-earnings ratio than Digi International, indicating that it is currently the more affordable of the two stocks.
This table compares Oclaro and Digi International’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
This is a breakdown of recent ratings for Oclaro and Digi International, as provided by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
Oclaro presently has a consensus target price of $12.67, indicating a potential upside of 80.69%. Digi International has a consensus target price of $14.50, indicating a potential upside of 45.73%. Given Oclaro’s stronger consensus rating and higher possible upside, research analysts plainly believe Oclaro is more favorable than Digi International.
Insider & Institutional Ownership
70.8% of Oclaro shares are held by institutional investors. Comparatively, 78.2% of Digi International shares are held by institutional investors. 2.0% of Oclaro shares are held by company insiders. Comparatively, 6.9% of Digi International shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock will outperform the market over the long term.
Oclaro beats Digi International on 11 of the 15 factors compared between the two stocks.
Oclaro, Inc. is a provider of optical components, modules and subsystems for the core optical transport, service provider, enterprise and data center markets. The Company provides various solutions for optical networks and interconnects driving the next wave of streaming video, cloud computing, application virtualization and other bandwidth-intensive and high-speed applications. The Company’s product offerings include client side transceivers, line side transceivers, tunable laser transmitters, lithium niobate modulators, transponder modules, and discrete lasers and receivers. It designs, manufactures and markets optical components, modules and subsystems that generate, detect, combine and separate light signals in optical communications networks. The Company supplies transmission products at the component level and the module level into 10 gigabits per second (Gb/s), 40 Gb/s and 100 Gb/s communications solutions.
About Digi International
Digi International Inc. is a provider of mission and business-critical machine-to-machine (M2M) and Internet-of-Things (IoT) connectivity products and services. The Company creates connected products and deploys and manages critical communications infrastructures in a range of environments. It offers four categories of hardware products: cellular routers and gateways, radio frequency (RF), embedded and network products. The Company’s cellular product category includes its cellular routers and all gateways. The Company’s RF product category includes its XBee modules, as well as other RF Solutions. Its embedded product category includes Digi Connect and Rabbit embedded systems on module and single board computers. Its network product category includes console and serial servers and universal serial bus (USB) connected products. The Company’s service offerings include wireless design services, Digi Device Cloud (which includes Digi Remote Manager) and enterprise support services.
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