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

Profitability

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

Net Margins Return on Equity Return on Assets
Novanta 8.39% 12.60% 7.39%
NVE Corporation 44.87% 14.02% 13.81%

Valuation & Earnings

This table compares Novanta and NVE Corporation’s gross revenue, earnings per share (EPS) 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
NVE Corporation $29.23 million 12.81 $18.97 million $2.70 28.65

NVE Corporation has higher revenue and earnings than Novanta.

Insider and Institutional Ownership

71.4% of NVE Corporation shares are held by institutional investors. 2.3% of NVE Corporation shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.

Dividends

NVE Corporation pays an annual dividend of $4.00 per share and has a dividend yield of 5.2%. Novanta does not pay a dividend. NVE Corporation pays out 148.1% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Analyst Recommendations

This is a breakdown of current recommendations and price targets for Novanta and NVE Corporation, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Novanta 0 0 0 0 N/A
NVE Corporation 0 1 0 0 2.00

NVE Corporation has a consensus target price of $79.00, indicating a potential upside of 2.12%. Given NVE Corporation’s higher probable upside, analysts clearly believe NVE Corporation is more favorable than Novanta.

Summary

NVE Corporation beats Novanta on 8 of the 9 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 Corporation 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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