Critical Analysis: EXFO (EXFO) and Mesa Laboratories (MLAB)

EXFO (NASDAQ: EXFO) and Mesa Laboratories (NASDAQ:MLAB) are both small-cap computer and technology companies, but which is the superior stock? We will compare the two companies based on the strength of their analyst recommendations, risk, valuation, dividends, profitabiliy, earnings and institutional ownership.

Risk & Volatility

EXFO has a beta of 0.57, meaning that its stock price is 43% less volatile than the S&P 500. Comparatively, Mesa Laboratories has a beta of 0.46, meaning that its stock price is 54% less volatile than the S&P 500.

Dividends

Mesa Laboratories pays an annual dividend of $0.64 per share and has a dividend yield of 0.4%. EXFO does not pay a dividend. Mesa Laboratories pays out 22.0% of its earnings in the form of a dividend.

Analyst Ratings

This is a breakdown of current recommendations and price targets for EXFO and Mesa Laboratories, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
EXFO	0	4	1	0	2.20
Mesa Laboratories	0	0	1	0	3.00

EXFO currently has a consensus target price of $5.70, indicating a potential upside of 31.03%. Given EXFO’s higher possible upside, equities analysts clearly believe EXFO is more favorable than Mesa Laboratories.

Profitability

This table compares EXFO and Mesa Laboratories’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
EXFO	0.93%	2.76%	2.10%
Mesa Laboratories	11.94%	17.67%	9.74%

Insider & Institutional Ownership

16.8% of EXFO shares are held by institutional investors. Comparatively, 65.2% of Mesa Laboratories shares are held by institutional investors. 20.0% of EXFO shares are held by company insiders. Comparatively, 17.0% of Mesa Laboratories shares are held by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company will outperform the market over the long term.

Valuation and Earnings

This table compares EXFO and Mesa Laboratories’ top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	EBITDA	Earnings Per Share	Price/Earnings Ratio
EXFO	$243.18 million	0.98	$17.91 million	$0.04	108.78
Mesa Laboratories	$93.67 million	5.93	$25.82 million	$2.91	51.10

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

Summary

Mesa Laboratories beats EXFO on 9 of the 15 factors compared between the two stocks.

EXFO Company Profile

EXFO Inc is a Canada-based company, which provides communications service providers (CSPs) and data center, cloud and Web-scale operators with field test, service assurance and analytics solutions to ensure the deployment, maintenance and management of physical, virtual, fixed and mobile networks. It focuses on network infrastructures: fourth generation (4G)/long-term evolution (LTE), wireless backhaul, small cells and distributed antenna systems (DAS), 100G network upgrades and fiber-to-the-home (FTTH)/fiber-to-the-curb (FTTC)/fiber-to-the-node (FTTN) deployments. It offers a range of wire line and wireless tests, service assurance and analytics solutions to the global telecommunications industry. Its products include TestFlow; LTB-8 platform; a family of optical time domain reflect meters (OTDRs); iSAM; MaxTester-940 Fiber Certifier optical loss test set (OLTS) for data center and enterprise markets, and the G.fast handheld test set.

Mesa Laboratories Company Profile

Mesa Laboratories, Inc. is focused primarily on quality control products and services. The Company operates through four segments: Instruments, Continuous Monitoring, Biological Indicators and Cold Chain. The Instruments Division designs, manufactures and markets quality control instruments and disposable products. Its Biological Indicators Division provides testing services, along with the manufacturing and marketing of biological indicators and distribution of chemical indicators used to assess the effectiveness of sterilization processes. Its Continuous Monitoring Division designs, develops and markets systems, which are used to monitor various environmental parameters. Its Cold Chain Division provides parameter (primarily temperature) monitoring of products in a cold chain. The Company’s brands include DataTrace, DialyGuard, DryCal, Torqo, SureTorque, BGI, Mesa, PCD, Apex, CheckPoint, Mesa and TempTrust.