Neonode (NASDAQ:NEON) and Key Tronic (NASDAQ:KTCC) Critical Review

Neonode (NASDAQ:NEON) and Key Tronic (NASDAQ:KTCC) are both small-cap technology companies, but which is the superior business? We will contrast the two businesses based on the strength of their earnings, profitability, institutional ownership, valuation, dividends, analyst recommendations and risk.

Risk & Volatility

Neonode has a beta of 1.12, suggesting that its share price is 12% more volatile than the S&P 500. Comparatively, Key Tronic has a beta of 1.14, suggesting that its share price is 14% more volatile than the S&P 500.

Valuation & Earnings

This table compares Neonode and Key Tronic”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Neonode	$2.06 million	7.33	$8.49 million	($0.33)	-2.73
Key Tronic	$386.67 million	0.06	-$47.79 million	($4.40)	-0.48

Neonode has higher earnings, but lower revenue than Key Tronic. Neonode is trading at a lower price-to-earnings ratio than Key Tronic, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Neonode and Key Tronic’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Neonode	397.84%	-32.35%	-28.42%
Key Tronic	-12.36%	-7.05%	-2.18%

Analyst Recommendations

This is a breakdown of recent ratings for Neonode and Key Tronic, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Neonode	1	0	0	0	1.00
Key Tronic	1	0	0	0	1.00

Institutional and Insider Ownership

11.6% of Neonode shares are owned by institutional investors. Comparatively, 40.7% of Key Tronic shares are owned by institutional investors. 21.9% of Neonode shares are owned by insiders. Comparatively, 7.9% of Key Tronic shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Summary

Key Tronic beats Neonode on 6 of the 11 factors compared between the two stocks.

About Neonode

Neonode Inc., together with its subsidiaries, develops optical sensing solutions for contactless touch, touch, and gesture sensing in the United States, Japan, South Korea, Germany, Switzerland, France, Sweden, China, and internationally. It also offers software solutions for machine perception to detect and track persons and objects in video streams from cameras and other types of imagers. In addition, the company sells touch sensor modules to OEMs, original design manufacturers, and systems integrators. Further, it licenses its zForce technology to original equipment manufacturers and automotive Tier 1 suppliers, as well as provides non-recurring engineering services related to application development. It serves office equipment, automotive, industrial automation, medical, military, and avionics markets. Neonode Inc. was incorporated in 1997 and is headquartered in Stockholm, Sweden.

About Key Tronic

Key Tronic Corporation provides contract manufacturing services to original equipment manufacturers in the United States and internationally. The company offers integrated electronic and mechanical engineering, assembly, sourcing and procurement, logistics, and new product testing services. Its services include product design; surface mount technologies and pin through hole capability for printed circuit board assembly; tool making; precision plastic molding; sheet metal fabrication and painting; liquid injection molding; complex assembly; prototype design; and full product assembly services. The company manufactures and sells keyboards and other input devices. It markets its products and services primarily through field sales people and distributors. Key Tronic Corporation was incorporated in 1969 and is headquartered in Spokane Valley, Washington.