Financial Analysis: Fabrinet (NYSE:FN) & Ultralife (NASDAQ:ULBI)

Ultralife (NASDAQ:ULBI) and Fabrinet (NYSE:FN) are both computer and technology companies, but which is the superior investment? We will compare the two businesses based on the strength of their institutional ownership, dividends, earnings, risk, valuation, profitability and analyst recommendations.

Risk & Volatility

Ultralife has a beta of 0.78, suggesting that its stock price is 22% less volatile than the S&P 500. Comparatively, Fabrinet has a beta of 1.2, suggesting that its stock price is 20% more volatile than the S&P 500.

Profitability

This table compares Ultralife and Fabrinet’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Ultralife	-4.37%	1.15%	0.70%
Fabrinet	9.94%	19.83%	13.41%

Valuation & Earnings

This table compares Ultralife and Fabrinet”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Ultralife	$191.16 million	0.53	-$5.90 million	($0.50)	-12.22
Fabrinet	$3.42 billion	5.23	$332.53 million	$11.64	42.86

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

Analyst Recommendations

This is a breakdown of current ratings for Ultralife and Fabrinet, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Ultralife	1	0	0	0	1.00
Fabrinet	0	4	6	0	2.60

Fabrinet has a consensus target price of $661.75, indicating a potential upside of 32.63%. Given Fabrinet’s stronger consensus rating and higher possible upside, analysts clearly believe Fabrinet is more favorable than Ultralife.

Insider & Institutional Ownership

30.7% of Ultralife shares are owned by institutional investors. Comparatively, 97.4% of Fabrinet shares are owned by institutional investors. 42.9% of Ultralife shares are owned by company insiders. Comparatively, 0.2% of Fabrinet shares are owned by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock will outperform the market over the long term.

Summary

Fabrinet beats Ultralife on 13 of the 14 factors compared between the two stocks.

About Ultralife

Ultralife Corporation, together with its subsidiaries, designs, manufactures, installs, and maintains power, and communication and electronics systems worldwide. The company operates in two segments, Battery & Energy Products and Communications Systems. The Battery & Energy Products segment offers lithium 9-volt, cylindrical, thin lithium manganese dioxide, rechargeable, and other non-rechargeable batteries; lithium-ion cells, multi-kilowatt module lithium-ion battery systems, and uninterruptable power supplies; and rugged military and commercial battery charging systems and accessories, including smart chargers, multi-bay charging systems, and various cables. The Communications Systems segment provides communications systems and accessories to support military communications systems, such as radio frequency amplifiers, power supplies and cables, connector assemblies, amplified speakers, equipment mounts, case equipment, man-portable systems, and integrated communication systems for fixed or vehicle applications comprising vehicle adapters, vehicle installed power enhanced rifleman appliqué systems, and SATCOM systems. This segment's military communications systems and accessories are designed to enhance and extend the operation of communications equipment, such as vehicle-mounted, manpack, and handheld transceivers. The company sells its products under the Ultralife, Ultralife HiRate, Ultralife Thin Cell, Ultralife Batteries, Lithium Power, McDowell Research, AMTITM, ABLETM, ACCUTRONICS, ACCUPRO, ENTELLION, SWE Southwest Electronic Energy Group, SWE SEASAFE, Excell Battery Group, and Criterion Gauge brands through original equipment manufacturers, and industrial and defense supply distributors. In addition, it sells its 9-volt battery to the broader consumer market through national and regional retail chains and online retailers. It serves government, defense, and commercial sectors. The company was incorporated in 1990 and is headquartered in Newark, New York.

About Fabrinet

Fabrinet provides optical packaging and precision optical, electro-mechanical, and electronic manufacturing services in North America, the Asia-Pacific, and Europe. The company offers a range of advanced optical and electro-mechanical capabilities in the manufacturing process, including process design and engineering, supply chain management, manufacturing, printed circuit board assembly, advanced packaging, integration, final assembly, and testing. Its products include switching products, including reconfigurable optical add-drop multiplexers, optical amplifiers, modulators, and other optical components and modules that enable network managers to route voice, video, and data communications traffic through fiber optic cables at various wavelengths, speeds, and over various distances. The company's products also comprise tunable lasers, transceivers, and transponders; and active optical cables, which provide high-speed interconnect capabilities for data centers and computing clusters, as well as Infiniband, Ethernet, fiber channel, and optical backplane connectivity. In addition, it provides solid state, diode-pumped, gas, and fiber lasers used in semiconductor processing, biotechnology and medical device, metrology, and material processing industries; and differential pressure, micro-gyro, fuel, and other sensors used in automobiles, as well as non-contact temperature measurement sensors for the medical industry. Further, the company designs and fabricates application-specific crystals, lenses, prisms, mirrors, laser components, and substrates; and other custom and standard borosilicate, clear fused quartz, and synthetic fused silica glass products. It serves original equipment manufacturers of optical communication components, modules and sub-systems, industrial lasers, automotive components, medical devices, and sensors. The company was incorporated in 1999 and is based in Grand Cayman, the Cayman Islands.