Sparton (NYSE: SPA) and Mellanox Technologies (NASDAQ:MLNX) are both technology companies, but which is the better investment? We will contrast the two companies based on the strength of their earnings, institutional ownership, valuation, profitability, risk, analyst recommendations and dividends.

Valuation & Earnings

This table compares Sparton and Mellanox Technologies’ revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Sparton $397.56 million 0.57 $1.31 million ($0.17) -136.35
Mellanox Technologies $857.50 million 3.91 $18.51 million ($0.16) -410.94

Mellanox Technologies has higher revenue and earnings than Sparton. Mellanox Technologies is trading at a lower price-to-earnings ratio than Sparton, indicating that it is currently the more affordable of the two stocks.

Insider & Institutional Ownership

63.0% of Sparton shares are held by institutional investors. Comparatively, 60.8% of Mellanox Technologies shares are held by institutional investors. 5.0% of Sparton shares are held by company insiders. Comparatively, 6.1% of Mellanox Technologies shares are held by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock is poised for long-term growth.

Profitability

This table compares Sparton and Mellanox Technologies’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Sparton -0.43% 8.52% 3.03%
Mellanox Technologies -0.92% 4.76% 3.24%

Risk & Volatility

Sparton has a beta of 1.32, meaning that its share price is 32% more volatile than the S&P 500. Comparatively, Mellanox Technologies has a beta of 0.62, meaning that its share price is 38% less volatile than the S&P 500.

Analyst Ratings

This is a breakdown of recent recommendations for Sparton and Mellanox Technologies, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Sparton 0 0 0 0 N/A
Mellanox Technologies 1 7 5 0 2.31

Mellanox Technologies has a consensus price target of $64.33, indicating a potential downside of 2.15%. Given Mellanox Technologies’ higher possible upside, analysts clearly believe Mellanox Technologies is more favorable than Sparton.

Summary

Mellanox Technologies beats Sparton on 8 of the 13 factors compared between the two stocks.

Sparton Company Profile

Sparton Corporation is a provider of design, development and manufacturing services for electromechanical devices, as well as engineered products complementary to the same electromechanical value stream. The Company operates through two segments: Manufacturing & Design Services (MDS) and Engineered Components & Products (ECP). The Company serves the medical and biotechnology, military and aerospace, and industrial and commercial markets. Its products and services include offerings for original equipment manufacturers (OEM) and emerging technology (ET) customers, which utilize microprocessor-based systems, such as transducers, printed circuit boards and assemblies, and sensors, as well as development and design engineering services. It develops and manufactures sonobuoys, which are anti-submarine warfare (ASW) devices. The Company also manufactures rugged flat panel display systems for military panel personal computer workstations, air traffic control and industrial applications.

Mellanox Technologies Company Profile

Mellanox Technologies, Ltd. is a fabless semiconductor company. The Company is an integrated supplier of interconnect products and solutions based on the InfiniBand and Ethernet standards. The Company operates in the development, manufacturing, marketing and sales of interconnect products segment. Its products facilitate data transmission between servers, storage systems, communications infrastructure equipment and other embedded systems. It operates its business globally and offers products to customers at various levels of integration. The products it offers include integrated circuits (ICs), adapter cards, switch systems, multi-core and network processors, cables, modules, software, services and accessories. Together these products form a networking solution, focused on computing, storage and communication applications used in multiple markets, including high-performance computing (HPC), cloud, Web 2.0, storage, financial services, and enterprise data center (EDC).

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