Comparing Novanta (NOVT) & NVE (NVEC)

Novanta (NASDAQ: NOVT) and NVE (NASDAQ:NVEC) are both small-cap computer and technology companies, but which is the superior stock? We will compare the two businesses based on the strength of their valuation, profitability, institutional ownership, analyst recommendations, risk, earnings and dividends.

Profitability

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

Net Margins Return on Equity Return on Assets
Novanta 12.45% 18.29% 9.56%
NVE 45.31% 14.68% 14.47%

Dividends

NVE pays an annual dividend of $4.00 per share and has a dividend yield of 5.2%. Novanta does not pay a dividend. NVE pays out 148.7% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Valuation & Earnings

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

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Novanta $384.76 million 4.81 $22.00 million $1.36 39.34
NVE $28.33 million 13.04 $12.94 million $2.69 28.37

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

Risk & Volatility

Novanta has a beta of 1.33, suggesting that its share price is 33% more volatile than the S&P 500. Comparatively, NVE has a beta of 1.13, suggesting that its share price is 13% more volatile than the S&P 500.

Insider and Institutional Ownership

76.8% of Novanta shares are held by institutional investors. Comparatively, 75.0% of NVE shares are held by institutional investors. 8.3% of Novanta shares are held by insiders. Comparatively, 2.3% of NVE shares are held by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company will outperform the market over the long term.

Analyst Recommendations

This is a summary of recent ratings and recommmendations for Novanta and NVE, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Novanta 0 0 1 0 3.00
NVE 0 1 0 0 2.00

Novanta currently has a consensus price target of $54.00, indicating a potential upside of 0.93%. NVE has a consensus price target of $79.00, indicating a potential upside of 3.53%. Given NVE’s higher probable upside, analysts clearly believe NVE is more favorable than Novanta.

Summary

Novanta beats NVE on 10 of the 16 factors compared between the two stocks.

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.

NVE Company Profile

NVE Corporation develops and sells devices that use spintronics, a nanotechnology that relies on electron spin to acquire, store and transmit information. The Company manufactures spintronic products, including sensors and couplers that are used to acquire and transmit data. The Company has also licensed its spintronic magnetoresistive random access memory technology (MRAM). Its parts are found in industrial, scientific, and medical applications. The Company’s products include sensors, couplers and MRAM products. Its sensor products detect the strength or gradient of magnetic fields and are used to determine position or speed. Its spintronic couplers combine a GMR sensor element and an IsoLoop integrated microscopic coil. MRAM uses spintronics to store data. It combines the speed of static random-access memory (SRAM), the density of dynamic random-access memory (DRAM) and the nonvolatility of flash memory. Data is stored in the spin of the electrons in thin metal alloy films.

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