Critical Comparison: Aehr Test Systems (NASDAQ:AEHR) & EXFO (EXFO)

EXFO (NASDAQ: EXFO) and Aehr Test Systems (NASDAQ:AEHR) are both small-cap computer and technology companies, but which is the superior investment? We will contrast the two businesses based on the strength of their risk, institutional ownership, profitability, dividends, valuation, analyst recommendations and earnings.

Analyst Recommendations

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This is a breakdown of recent ratings and price targets for EXFO and Aehr Test Systems, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
EXFO 0 4 1 0 2.20
Aehr Test Systems 0 0 0 0 N/A

EXFO presently has a consensus price target of $5.35, suggesting a potential upside of 32.10%. Given EXFO’s higher possible upside, research analysts plainly believe EXFO is more favorable than Aehr Test Systems.

Valuation & Earnings

This table compares EXFO and Aehr Test Systems’ gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
EXFO $243.30 million 0.91 $850,000.00 $0.21 19.29
Aehr Test Systems $18.90 million 2.64 -$5.65 million ($0.29) -7.90

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

Profitability

This table compares EXFO and Aehr Test Systems’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
EXFO 0.09% 5.22% 3.94%
Aehr Test Systems -1.58% -1.44% -0.80%

Volatility and Risk

EXFO has a beta of 0.6, suggesting that its stock price is 40% less volatile than the S&P 500. Comparatively, Aehr Test Systems has a beta of 0.79, suggesting that its stock price is 21% less volatile than the S&P 500.

Institutional & Insider Ownership

14.8% of EXFO shares are held by institutional investors. Comparatively, 25.0% of Aehr Test Systems shares are held by institutional investors. 20.0% of EXFO shares are held by insiders. Comparatively, 21.9% of Aehr Test Systems shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company is poised for long-term growth.

Summary

EXFO beats Aehr Test Systems on 8 of the 12 factors compared between the two stocks.

EXFO Company Profile

EXFO Inc. develops, manufactures, and markets smarter network test, monitoring, and analytics solutions for communications service providers, network equipment manufacturers, and Webscale companies. It offers lab and manufacturing testing systems, including lab platforms; network simulation and load testing tools to meet the mobile telecom and VOIP/IMS network test challenges; transport and datacom solutions, such as Ethernet testing, fiber channel testing, DSn/PDH and SONET/SDH testing, synchronization testing, and SONET/SDH, OTN, and multiservice testing solutions; and optical products comprising power meters, light sources and amplifiers, variable attenuators, switch and utility modules, polarization analysis, optical communication analyzers, spectral testing products, bit-error-rate testing products, optical benchtop kits, osics multifunction platform, optical component testers, and tunable filters. The company also provides field network testing products, including FTB Ecosystem test tools; FTB platforms; test function virtualization solutions; transport and datacom solutions designed to address DSn/PDH and SONET/SDH, carrier Ethernet, testing needs; optical instruments; copper access/triple-play handheld instruments to assess the quality of access network physical layer and performance of multiplay services; mobile broadband tools to meet mobile telecom network test challenges; and wireless network testing solutions. In addition, it offers service assurance platforms, fiber network monitoring and management solutions, and remote network monitoring solutions; and solutions for FTTx access networks and metro/core networks, as well as technical support, instrument, and system services. The company sells products through its direct sales force, sales representatives, and distributors in the United States, Canada, and others. EXFO Inc. was founded in 1985 and is headquartered in Quebec, Canada. EXFO Inc. is a subsidiary of G. Lamonde Investissements Financiers Inc.

Aehr Test Systems Company Profile

Aehr Test Systems is engaged in the designing, manufacturing and marketing of advanced test and burn-in products to the semiconductor manufacturing industry. The Company manufactures and markets full wafer contact test systems, test during burn-in systems, test fixtures, die carriers and related accessories. The Company’s principal products are the Advanced Burn-In and Test System (ABTS), the FOX full wafer contact parallel test and burn-in systems, WaferPak full wafer contactor, the DiePak carrier and test fixtures. The Company develops, manufactures and sells systems, which are designed to reduce the cost of testing and to perform reliability screening, or burn-in, of complex logic devices, memory integrated circuits (ICs), sensors and optical devices. These systems can be used to perform parallel testing and burn-in of packaged ICs, singulated bare die or ICs still in wafer form.

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