Neonode (NASDAQ: NEON) and Fabrinet (NYSE:FN) are both small-cap computer and technology companies, but which is the superior investment? We will contrast the two businesses based on the strength of their analyst recommendations, institutional ownership, profitability, valuation, dividends, earnings and risk.
Volatility & Risk
Neonode has a beta of 1.22, meaning that its share price is 22% more volatile than the S&P 500. Comparatively, Fabrinet has a beta of 1.08, meaning that its share price is 8% more volatile than the S&P 500.
Profitability
This table compares Neonode and Fabrinet’s net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| Neonode | -48.19% | -123.74% | -44.58% |
| Fabrinet | 6.74% | 14.95% | 9.71% |
Analyst Recommendations
This is a summary of recent ratings and price targets for Neonode and Fabrinet, as reported by MarketBeat.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| Neonode | 0 | 1 | 1 | 0 | 2.50 |
| Fabrinet | 0 | 0 | 4 | 1 | 3.20 |
Neonode currently has a consensus price target of $3.00, indicating a potential upside of 175.23%. Fabrinet has a consensus price target of $53.55, indicating a potential upside of 26.96%. Given Neonode’s higher probable upside, equities research analysts plainly believe Neonode is more favorable than Fabrinet.
Insider & Institutional Ownership
25.7% of Neonode shares are owned by institutional investors. Comparatively, 95.1% of Fabrinet shares are owned by institutional investors. 15.8% of Neonode shares are owned by insiders. Comparatively, 4.3% of Fabrinet 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.
Earnings and Valuation
This table compares Neonode and Fabrinet’s top-line revenue, earnings per share and valuation.
| Gross Revenue | Price/Sales Ratio | EBITDA | Earnings Per Share | Price/Earnings Ratio | |
| Neonode | $9.41 million | 5.66 | -$3.47 million | ($0.10) | -10.90 |
| Fabrinet | $1.33 billion | 1.18 | $121.84 million | $2.38 | 17.72 |
Fabrinet has higher revenue and earnings than Neonode. Neonode is trading at a lower price-to-earnings ratio than Fabrinet, indicating that it is currently the more affordable of the two stocks.
Summary
Fabrinet beats Neonode on 10 of the 14 factors compared between the two stocks.
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.
About Fabrinet
Fabrinet provides optical packaging and precision optical, electro-mechanical and electronic manufacturing services to original equipment manufacturers (OEMs) of products, such as optical communication components, modules and sub-systems, industrial lasers, medical devices and sensors. The Company offers a range of optical and electro-mechanical capabilities across the manufacturing process, including process design and engineering, supply chain management, manufacturing, complex printed circuit board assembly, advanced packaging, integration, final assembly and test. The Company’s customer base includes companies in industries that require precision manufacturing capabilities, such as optical communications, industrial lasers, automotive, medical and sensors. Its customers in these industries support end-markets, including automotive, biotechnology, communications, materials processing, medical devices, metrology and semiconductor processing.
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