Critical Review: Neonode (NEON) vs. Sensata Technologies Holding N.V. (NYSE:ST)

Sensata Technologies Holding N.V. (NYSE: ST) and Neonode (NASDAQ:NEON) are both computer and technology companies, but which is the superior investment? We will compare the two companies based on the strength of their risk, analyst recommendations, earnings, valuation, profitabiliy, dividends and institutional ownership.

Analyst Recommendations

This is a breakdown of recent recommendations for Sensata Technologies Holding N.V. and Neonode, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Sensata Technologies Holding N.V.	0	3	5	0	2.63
Neonode	0	0	1	0	3.00

Sensata Technologies Holding N.V. currently has a consensus price target of $46.50, suggesting a potential upside of 3.08%. Neonode has a consensus price target of $4.00, suggesting a potential upside of 220.00%. Given Neonode’s stronger consensus rating and higher possible upside, analysts clearly believe Neonode is more favorable than Sensata Technologies Holding N.V..

Volatility and Risk

Sensata Technologies Holding N.V. has a beta of 1.45, indicating that its share price is 45% more volatile than the S&P 500. Comparatively, Neonode has a beta of 1.2, indicating that its share price is 20% more volatile than the S&P 500.

Earnings and Valuation

This table compares Sensata Technologies Holding N.V. and Neonode’s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	EBITDA	Earnings Per Share	Price/Earnings Ratio
Sensata Technologies Holding N.V.	$3.21 billion	2.40	$807.75 million	$1.60	28.19
Neonode	$9.41 million	6.49	-$3.47 million	($0.11)	-11.36

Sensata Technologies Holding N.V. has higher revenue and earnings than Neonode. Neonode is trading at a lower price-to-earnings ratio than Sensata Technologies Holding N.V., indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Sensata Technologies Holding N.V. and Neonode’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Sensata Technologies Holding N.V.	8.51%	26.46%	8.01%
Neonode	-50.46%	-169.76%	-58.14%

Institutional and Insider Ownership

25.4% of Neonode shares are owned by institutional investors. 1.0% of Sensata Technologies Holding N.V. shares are owned by insiders. Comparatively, 15.8% of Neonode shares are owned by 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.

Summary

Sensata Technologies Holding N.V. beats Neonode on 8 of the 13 factors compared between the two stocks.

About Sensata Technologies Holding N.V.

Sensata Technologies Holding N.V. is an industrial technology company. The Company is engaged in the development, manufacture, and sale of sensors and controls. The Company operates through two segments: Performance Sensing and Sensing Solutions. It produces a range of sensors and controls for applications, such as pressure sensors in automotive systems, thermal circuit breakers in aircraft, and bimetal current and temperature control devices. Its sensors are devices that translate a physical phenomenon, such as pressure or position, into electronic signals that microprocessors can act upon. Its controls are customized devices embedded within systems to protect them from excessive heat or current. Its primary products include low-, medium-, and high-pressure sensors, speed and position sensors, bimetal electromechanical controls, temperature sensors, power conversion and control products, thermal and magnetic-hydraulic circuit breakers, pressure switches and interconnection products.

About Neonode

Neonode Inc., formerly SBE, Inc., develops and licenses user interfaces and optical infrared touch solutions. The Company’s technology offers multiple features, including the ability to sense an object’s size, depth, velocity, pressure and proximity to any type of surface. It operates through the touch technology licensing business segment. It licenses its multi-touch technology to original equipment manufacturers (OEMs) and original design manufacturers (ODMs) who incorporate it into devices that they produce and sell. In addition, it develops prototype products and is engaged in product engineering design discussions with various global OEMs and ODMs. The Company offers its family of touch solutions under the brands MultiSensing and zForce. Its solution provides sense enablement through touch and proximity sensing. Its technology has application in various fields, such as laptop computers, all-in-one computers, standalone monitors, printer products and global positioning systems.