Contrasting IPG Photonics (IPGP) and Novanta (NOVT)

IPG Photonics (NASDAQ: IPGP) and Novanta (NASDAQ:NOVT) are both mid-cap computer and technology companies, but which is the better business? We will contrast the two companies based on the strength of their institutional ownership, profitability, valuation, analyst recommendations, dividends, earnings and risk.

Institutional and Insider Ownership

56.5% of IPG Photonics shares are held by institutional investors. Comparatively, 78.9% of Novanta shares are held by institutional investors. 33.8% of IPG Photonics shares are held by company insiders. Comparatively, 8.3% of Novanta shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company is poised for long-term growth.

Analyst Ratings

This is a breakdown of recent ratings and recommmendations for IPG Photonics and Novanta, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
IPG Photonics 0 3 6 0 2.67
Novanta 0 0 1 0 3.00

IPG Photonics presently has a consensus price target of $179.13, suggesting a potential downside of 31.04%. Novanta has a consensus price target of $54.00, suggesting a potential downside of 9.70%. Given Novanta’s stronger consensus rating and higher possible upside, analysts clearly believe Novanta is more favorable than IPG Photonics.

Volatility & Risk

IPG Photonics has a beta of 1.71, suggesting that its share price is 71% more volatile than the S&P 500. Comparatively, Novanta has a beta of 1.27, suggesting that its share price is 27% more volatile than the S&P 500.

Valuation and Earnings

This table compares IPG Photonics and Novanta’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
IPG Photonics $1.01 billion 13.84 $260.75 million $6.79 38.25
Novanta $384.76 million 5.38 $22.00 million $1.36 43.97

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

Profitability

This table compares IPG Photonics and Novanta’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
IPG Photonics 27.85% 21.17% 18.56%
Novanta 12.45% 18.29% 9.56%

Summary

IPG Photonics beats Novanta on 10 of the 14 factors compared between the two stocks.

IPG Photonics Company Profile

IPG Photonics Corporation is a developer and manufacturer of a line of fiber lasers, fiber amplifiers, diode lasers, laser systems and optical accessories that are used for various applications. The Company offers a line of lasers and amplifiers, which are used in materials processing, communications and medical applications. The Company sells its products globally to original equipment manufacturers (OEMs), system integrators and end users. The Company’s manufacturing facilities are located in the United States, Germany and Russia. The Company offers laser-based systems for certain markets and applications. Its products are designed to be used as general-purpose energy or light sources. Its product line includes High-Power Ytterbium CW (1,000-100,000 Watts), Mid-Power Ytterbium CW (100-999 Watts), Pulsed Ytterbium (0.1 to 200 Watts), Pulsed and CW, Quasi-CW Ytterbium (100-4,500 Watts), Erbium Amplifiers and Transceivers.

Novanta Company Profile

Novanta Inc., formerly GSI Group Inc., designs, develops, manufactures and sells precision photonic and motion control components and subsystems. The Company’s segments are Photonics, Vision and Precision Motion. The Photonics segment designs, manufactures and markets photonics-based solutions, including carbon dioxide (CO2) laser sources, laser scanning and laser beam delivery products, to customers around the world. The Vision Technologies segment designs, manufactures and markets a range of medical grade technologies, including visualization solutions, imaging informatics products, optical data collection and machine vision technologies, radio frequency identification (RFID) technologies, and thermal printers, to customers around the world. The Company’s Precision Motion segment designs, manufactures and markets optical encoders, precision motors and other motion control technology, air bearing spindles and precision machined components to customers around the world.

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