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

Institutional and Insider Ownership

55.2% of Transcat shares are owned by institutional investors. Comparatively, 25.0% of Aehr Test Systems shares are owned by institutional investors. 8.8% of Transcat shares are owned by company insiders. Comparatively, 21.9% of Aehr Test Systems shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Analyst Recommendations

This is a breakdown of recent ratings and recommmendations for Transcat and Aehr Test Systems, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Transcat 0 0 3 0 3.00
Aehr Test Systems 0 0 0 0 N/A

Transcat presently has a consensus target price of $20.00, indicating a potential upside of 19.76%. Given Transcat’s higher probable upside, equities analysts plainly believe Transcat is more favorable than Aehr Test Systems.

Profitability

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

Net Margins Return on Equity Return on Assets
Transcat 3.24% 10.03% 4.94%
Aehr Test Systems -1.58% -1.41% -0.80%

Volatility & Risk

Transcat has a beta of 0.42, suggesting that its share price is 58% less volatile than the S&P 500. Comparatively, Aehr Test Systems has a beta of 0.79, suggesting that its share price is 21% less volatile than the S&P 500.

Valuation and Earnings

This table compares Transcat and Aehr Test Systems’ top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Transcat $143.90 million 0.83 $4.52 million $0.64 26.09
Aehr Test Systems $18.90 million 2.76 -$5.65 million ($0.29) -8.21

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

Summary

Transcat beats Aehr Test Systems on 9 of the 12 factors compared between the two stocks.

Transcat Company Profile

Transcat, Inc. provides calibration and laboratory instrument services in the United States, Canada, and internationally. It operates in two segments, Service and Distribution. The Service segment offers calibration, repair, inspection, analytical qualifications, preventative maintenance, consulting, and other related services. This segment also provides CalTrak, a proprietary document and asset management system that is used to integrate and manage the workflow of its calibration service centers and customers' assets; CalTrak Online, which provides its customers with Web-based asset management capability, as well as an off-site archive of calibration and other service records; and Compliance, Control and Cost, a cloud-based customer portal and asset management tool. The Distribution segment distributes approximately 100,000 test, measurement, and control instruments for customers' test and measurement instrumentation needs. This segment markets and sells its products through Website, digital and print advertising, proactive outbound sales, and an inbound call center. The company provides services and products to highly regulated industries, principally life science, which includes companies in the pharmaceutical, biotechnology, medical device, and other FDA-regulated industries; and additional industries, including industrial manufacturing, oil and gas and alternative energy, aerospace and defense, and other industries that require accuracy in processes and confirmation of the capabilities of their equipment. Transcat, Inc. was founded in 1964 and is headquartered in Rochester, New York.

Aehr Test Systems Company Profile

Aehr Test Systems designs, engineers, manufactures, and sells test and burn-in equipment used in the semiconductor industry worldwide. The company offers full wafer contact test systems, test during burn-in systems, test fixtures, die carriers, and related accessories; and Advanced Burn-in and Test System family of packaged part burn-in and test systems, which perform test during burn-in of complex devices, such as digital signal processors, microprocessors, microcontrollers, and systems-on-a-chip, as well as offer individual temperature control for high-power advanced logic devices. The company also provides FOX systems, which are full wafer contact parallel test and burn-in systems designed to make contact with all pads of a wafer simultaneously; WaferPak cartridge that includes a full-wafer probe card for use in testing wafers in FOX systems; DiePak carrier, a reusable and temporary package that enables IC manufacturers to perform final test and burn-in of singulated bare die; and test fixtures that hold the devices undergoing test or burn-in and electrically connect the devices under test to the system electronics. In addition, the company offers customer service and support programs, including system installation, system repair, applications engineering support, spare parts inventory, customer training, and documentation services. It markets and sells its products to semiconductor manufacturers, semiconductor contract assemblers, electronics manufacturers, and burn-in and test service companies through a network of distributors and sales representatives. Aehr Test Systems was founded in 1977 and is headquartered in Fremont, California.

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