Critical Survey: Energy Focus (EFOI) versus Research Frontiers (REFR)

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

Earnings & Valuation

This table compares Energy Focus and Research Frontiers’ top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	EBITDA	Earnings Per Share	Price/Earnings Ratio
Energy Focus	$26.68 million	0.79	-$17.01 million	($1.67)	-1.07
Research Frontiers	$1.22 million	24.04	-$3.85 million	($0.14)	-8.71

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.

Insider & Institutional Ownership

18.2% of Energy Focus shares are owned by institutional investors. Comparatively, 19.6% of Research Frontiers shares are owned by institutional investors. 11.4% of Energy Focus shares are owned by company insiders. Comparatively, 11.6% of Research Frontiers shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.

Analyst Ratings

This is a summary of recent recommendations for Energy Focus and Research Frontiers, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Energy Focus	0	2	2	0	2.50
Research Frontiers	0	0	1	0	3.00

Energy Focus currently has a consensus price target of $6.88, suggesting a potential upside of 284.08%. Research Frontiers has a consensus price target of $4.00, suggesting a potential upside of 227.87%. Given Energy Focus’ higher probable upside, equities research analysts plainly believe Energy Focus is more favorable than Research Frontiers.

Risk & Volatility

Energy Focus has a beta of -0.23, meaning that its share price is 123% less volatile than the S&P 500. Comparatively, Research Frontiers has a beta of 0.28, meaning that its share price is 72% less volatile than the S&P 500.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Energy Focus	-72.79%	-43.14%	-36.42%
Research Frontiers	-255.89%	-73.14%	-66.66%

Summary

Research Frontiers beats Energy Focus on 7 of the 13 factors compared between the two stocks.

About Energy Focus

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.

About Research Frontiers

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.