Critical Comparison: Harmonic (HLIT) versus EMCORE (EMKR)

Harmonic (NASDAQ: HLIT) and EMCORE (NASDAQ:EMKR) 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 profitability, valuation, dividends, earnings, risk, analyst recommendations and institutional ownership.

Insider & Institutional Ownership

91.4% of Harmonic shares are held by institutional investors. Comparatively, 66.1% of EMCORE shares are held by institutional investors. 5.5% of Harmonic shares are held by insiders. Comparatively, 2.0% of EMCORE shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Valuation and Earnings

This table compares Harmonic and EMCORE’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Harmonic $405.91 million 0.60 -$72.31 million ($1.01) -2.97
EMCORE $122.89 million 1.22 $8.23 million $0.24 23.00

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

Volatility and Risk

Harmonic has a beta of 0.88, indicating that its stock price is 12% less volatile than the S&P 500. Comparatively, EMCORE has a beta of 0.14, indicating that its stock price is 86% less volatile than the S&P 500.

Analyst Recommendations

This is a summary of recent ratings and recommmendations for Harmonic and EMCORE, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Harmonic 0 2 2 0 2.50
EMCORE 0 2 1 0 2.33

Harmonic currently has a consensus target price of $5.33, suggesting a potential upside of 77.78%. EMCORE has a consensus target price of $6.67, suggesting a potential upside of 20.77%. Given Harmonic’s stronger consensus rating and higher probable upside, research analysts clearly believe Harmonic is more favorable than EMCORE.

Profitability

This table compares Harmonic and EMCORE’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Harmonic -22.02% -13.06% -6.02%
EMCORE 5.48% 6.59% 5.56%

Harmonic Company Profile

Harmonic Inc. (Harmonic) designs, manufactures and sells video infrastructure products, and system solutions. The Company has two segments: Video and Cable Edge. Harmonic provides technical support and professional services to its customers around the world. The Video segment sells video processing and production, and playout solutions and services to broadcast and media companies, streaming media companies, cable operators, and satellite and telecommunications (telco), and pay television (TV) service providers. Its Cable Edge business sells cable edge solutions and related services to cable operators around the world. The Video segment offers a range of products and solutions, as well as software-based media processing platforms. The Company’s Narrowcast Services Gateway (NSG) products are integrated edge gateway products that integrate routing, multiplexing, scrambling and modulation into a single package for the delivery of narrowcast services to subscribers over cable networks.

EMCORE Company Profile

EMCORE Corporation is engaged in designing and manufacturing indium phosphide (InP) optical chips, components, subsystems and systems for the broadband and specialty fiber optics market. The Company focuses on linear fiber optic transmission technology. The Company operates through Fiber Optics segment. The Company provides optical components, and also end-to-end solutions for high-speed communications network infrastructures. The Company’s optical technologies are designed for cable television (CATV) and fiber-to-the-premise (FTTP) networks, telecommunications and data centers, satellite communications, aerospace and defense, wireless networks, and broadcast and professional audio/video systems. The Company’s fiber optics products enable information that is modulated on light signals to be transmitted, routed (switched) and received in communication systems and networks.

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