Research Frontiers (NASDAQ: REFR) and Energy Focus (NASDAQ:EFOI) are both small-cap computer and technology companies, but which is the better investment? We will contrast the two businesses based on the strength of their analyst recommendations, valuation, earnings, profitability, dividends, risk and institutional ownership.
Risk & Volatility
Research Frontiers has a beta of 0.28, indicating that its share price is 72% less volatile than the S&P 500. Comparatively, Energy Focus has a beta of -0.23, indicating that its share price is 123% less volatile than the S&P 500.
Institutional and Insider Ownership
19.6% of Research Frontiers shares are owned by institutional investors. Comparatively, 18.1% of Energy Focus shares are owned by institutional investors. 11.6% of Research Frontiers shares are owned by insiders. Comparatively, 11.4% of Energy Focus 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.
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 | -255.89% | -73.14% | -66.66% |
| Energy Focus | -72.83% | -43.27% | -36.91% |
Valuation and Earnings
This table compares Research Frontiers and Energy Focus’ top-line revenue, earnings per share (EPS) and valuation.
| Gross Revenue | Price/Sales Ratio | EBITDA | Earnings Per Share | Price/Earnings Ratio | |
| Research Frontiers | $1.22 million | 20.10 | -$3.85 million | ($0.14) | -7.29 |
| Energy Focus | $26.68 million | 0.97 | -$17.01 million | ($1.59) | -1.38 |
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 Ratings
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 | 0 | 1 | 0 | 3.00 |
| Energy Focus | 0 | 1 | 3 | 0 | 2.75 |
Research Frontiers currently has a consensus price target of $4.00, suggesting a potential upside of 292.16%. Energy Focus has a consensus price target of $6.70, suggesting a potential upside of 205.94%. Given Research Frontiers’ stronger consensus rating and higher probable upside, research analysts plainly believe Research Frontiers is more favorable than Energy Focus.
Summary
Research Frontiers beats Energy Focus on 8 of the 13 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.
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