Novanta (NASDAQ: GSIG) and Methode Electronics (NYSE:MEI) are both industrials companies, but which is the better investment? We will compare the two businesses based on the strength of their risk, valuation, institutional ownership, analyst recommendations, earnings, profitability and dividends.

Analyst Recommendations

This is a summary of recent ratings and price targets for Novanta and Methode Electronics, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Novanta 0 0 0 0 N/A
Methode Electronics 0 1 3 0 2.75

Methode Electronics has a consensus target price of $45.50, suggesting a potential upside of 16.82%. Given Methode Electronics’ higher probable upside, analysts clearly believe Methode Electronics is more favorable than Novanta.

Insider & Institutional Ownership

90.2% of Methode Electronics shares are held by institutional investors. 4.4% of Methode Electronics shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Earnings and Valuation

This table compares Novanta and Methode Electronics’ top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Novanta N/A N/A N/A N/A N/A
Methode Electronics $816.50 million 1.75 $149.90 million $2.48 15.71

Methode Electronics has higher revenue and earnings than Novanta.

Dividends

Methode Electronics pays an annual dividend of $0.36 per share and has a dividend yield of 0.9%. Novanta does not pay a dividend. Methode Electronics pays out 14.5% of its earnings in the form of a dividend.

Profitability

This table compares Novanta and Methode Electronics’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Novanta 8.39% 12.60% 7.39%
Methode Electronics 11.38% 18.81% 14.16%

Summary

Methode Electronics beats Novanta on 9 of the 10 factors compared between the two stocks.

About Novanta

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.

About Methode Electronics

Methode Electronics, Inc. (Methode) is a manufacturer of component and subsystem devices. The Company designs, manufactures and markets devices employing electrical, radio remote control, electronic, wireless and sensing technologies. The Company operates through segments, including Automotive, Interface, Power Products and Other. The Automotive segment supplies electronic and electro-mechanical devices and related products to automobile original equipment manufacturers (OEMs). The Interface segment provides a range of copper and fiber-optic interface and interface solutions. The Power Products segment manufactures braided flexible cables, current-carrying laminated bus devices, custom power-product assemblies, such as PowerRail solution, high-current low voltage flexible power cabling systems and powder coated bus bars. The Other segment includes medical devices, inverters and battery systems, and insulated gate bipolar transistor solutions.

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