Analyzing Research Frontiers (NASDAQ:REFR) and Energy Focus (EFOI)

Research Frontiers (NASDAQ: REFR) and Energy Focus (NASDAQ:EFOI) are both small-cap computer and technology companies, but which is the better business? We will compare the two companies based on the strength of their earnings, institutional ownership, risk, dividends, valuation, profitabiliy and analyst recommendations.

Valuation and Earnings

This table compares Research Frontiers and Energy Focus’ revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	EBITDA	Earnings Per Share	Price/Earnings Ratio
Research Frontiers	$1.22 million	25.23	-$3.85 million	($0.17)	-7.53
Energy Focus	$26.68 million	1.00	-$17.01 million	($1.67)	-1.36

Research Frontiers has higher revenue, but lower earnings than Energy Focus. Research Frontiers is trading at a lower price-to-earnings ratio than Energy Focus, indicating that it is currently the more affordable of the two stocks.

Analyst Recommendations

This is a breakdown of recent ratings and target prices for Research Frontiers and Energy Focus, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Research Frontiers	0	1	1	0	2.50
Energy Focus	0	2	2	0	2.50

Research Frontiers presently has a consensus target price of $4.00, indicating a potential upside of 212.50%. Energy Focus has a consensus target price of $6.88, indicating a potential upside of 202.86%. Given Research Frontiers’ higher probable upside, equities analysts plainly believe Research Frontiers is more favorable than Energy Focus.

Profitability

This table compares Research Frontiers and Energy Focus’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Research Frontiers	-329.10%	-73.50%	-67.03%
Energy Focus	-72.79%	-43.14%	-36.42%

Insider and Institutional Ownership

19.6% of Research Frontiers shares are held by institutional investors. Comparatively, 18.0% of Energy Focus shares are held by institutional investors. 11.6% of Research Frontiers shares are held by insiders. Comparatively, 11.4% of Energy Focus shares are held by 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.

Volatility and Risk

Research Frontiers has a beta of 0.28, suggesting that its share price is 72% less volatile than the S&P 500. Comparatively, Energy Focus has a beta of -0.19, suggesting that its share price is 119% less volatile than the S&P 500.

Summary

Research Frontiers beats Energy Focus on 7 of the 12 factors compared between the two stocks.

Research Frontiers Company Profile

Research Frontiers Incorporated (Research Frontiers) is engaged in the development and marketing of technology and devices to control the flow of light. The Company develops and licenses its patented suspended particle device (SPD-Smart) light-control technology to other companies that manufacture and market either the SPD-Smart chemical emulsion, light-control film made from the chemical emulsion, lamination services, electronics to power end-products incorporating the film, or the end-products themselves, such as smart windows, skylights and sunroofs. Research Frontiers has approximately 40 companies that, in the aggregate, are licensed to serve over four SPD-Smart application areas, including aerospace, architectural, automotive and marine products. Its VariGuard business unit markets and sells SPD-Smart products directly to customers for specialty uses, such as the protection of artwork and light-sensitive documents in museums and private collections.

Energy Focus Company Profile

Energy Focus, Inc. along with its subsidiaries is engaged in the design, development, manufacturing, marketing, installation and sale of lighting systems. The Company is engaged in developing and selling of light-emitting diode (LED) lighting products for military maritime market, and general commercial and industrial markets. It produces, sources and/or markets a range of lighting technologies to serve its primary end markets. It offers military maritime products, such as Military Intellitube, military globe lights and military berth light to serve the United States navy and allied foreign navies. It offers commercial products, such as direct-wire tubular LED (TLED) replacements for linear fluorescent lamps, LED dock lights, low-bay and high-bay lighting for high-intensity discharge applications and LED retrofit kits to serve general commercial and industrial markets.