Critical Analysis: Immersion (IMMR) & Avid Technology (AVID)

Immersion (NASDAQ: IMMR) and Avid Technology (NASDAQ:AVID) are both small-cap computer and technology companies, but which is the better investment? We will contrast the two businesses based on the strength of their analyst recommendations, valuation, earnings, profitability, dividends, risk and institutional ownership.

Risk & Volatility

Immersion has a beta of 1.82, indicating that its share price is 82% more volatile than the S&P 500. Comparatively, Avid Technology has a beta of 1.8, indicating that its share price is 80% more volatile than the S&P 500.

Profitability

This table compares Immersion and Avid Technology’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Immersion -190.18% -100.50% -43.28%
Avid Technology -1.75% -5.36% 6.12%

Analyst Ratings

This is a breakdown of recent ratings and target prices for Immersion and Avid Technology, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Immersion 0 0 5 0 3.00
Avid Technology 1 0 0 0 1.00

Immersion currently has a consensus price target of $12.65, suggesting a potential upside of 33.30%. Avid Technology has a consensus price target of $4.50, suggesting a potential downside of 0.66%. Given Immersion’s stronger consensus rating and higher probable upside, research analysts plainly believe Immersion is more favorable than Avid Technology.

Institutional and Insider Ownership

79.0% of Immersion shares are owned by institutional investors. Comparatively, 71.8% of Avid Technology shares are owned by institutional investors. 7.2% of Immersion shares are owned by insiders. Comparatively, 7.5% of Avid Technology shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Earnings & Valuation

This table compares Immersion and Avid Technology’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Immersion $57.09 million 4.86 -$39.38 million ($2.45) -3.87
Avid Technology $511.93 million 0.36 $48.21 million ($0.18) -25.17

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

About Immersion

Immersion Corporation is a licensing company focused on the creation, design, development and licensing of haptic technologies that allow people to use their sense of touch when operating digital devices. The Company develops, licenses and supports a range of software and intellectual property (IP). It is focused on the markets, including mobile devices, wearables, consumer, mobile entertainment and other content; console gaming; automotive; medical, and commercial. It provides advanced tactile software, related tools and technical assistance to certain customers, and offers licenses to its patented IP to other customers. Its licenses enable customers to deploy haptically-enabled devices, content and other offerings, which they sell under own brand names. It holds patents, covering digital technologies and including ways in which touch-related technology can be incorporated into and between hardware products and components, systems software, application software, and digital content.

About Avid Technology

Avid Technology, Inc. is a provider of an open and integrated technology platform, along with applications and services that enable the creation, distribution and monetization of audio and video content. The Company develops, markets, sells and supports software and hardware for digital media content production, management, secured content storage and distribution. The Company’s products are used in production and post-production facilities; film studios; network, affiliate, independent and cable television stations; recording studios; live-sound performance venues; advertising agencies; government and educational institutions; corporate communication departments, and by independent video and audio creative professionals, as well as aspiring professionals and enthusiasts. Projects produced using its products include feature films, television programs, live events, news broadcasts, commercials, music, video and other digital media content.

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