NeoPhotonics (NYSE:NPTN) and Rubicon Technology (NASDAQ:RBCN) are both small-cap computer and technology companies, but which is the better investment? We will compare the two businesses based on the strength of their valuation, risk, analyst recommendations, profitability, institutional ownership, dividends and earnings.

Profitability

This table compares NeoPhotonics and Rubicon Technology’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
NeoPhotonics -7.51% -9.10% -4.18%
Rubicon Technology -29.68% -2.91% -2.80%

Institutional and Insider Ownership

74.4% of NeoPhotonics shares are owned by institutional investors. Comparatively, 25.4% of Rubicon Technology shares are owned by institutional investors. 16.0% of NeoPhotonics shares are owned by company insiders. Comparatively, 13.9% of Rubicon Technology shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Volatility and Risk

NeoPhotonics has a beta of 1.74, meaning that its share price is 74% more volatile than the S&P 500. Comparatively, Rubicon Technology has a beta of 0.7, meaning that its share price is 30% less volatile than the S&P 500.

Valuation & Earnings

This table compares NeoPhotonics and Rubicon Technology’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
NeoPhotonics $322.54 million 1.16 -$43.64 million ($0.74) -10.47
Rubicon Technology $3.88 million 6.25 $960,000.00 N/A N/A

Rubicon Technology has lower revenue, but higher earnings than NeoPhotonics.

Analyst Recommendations

This is a summary of current ratings for NeoPhotonics and Rubicon Technology, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
NeoPhotonics 0 2 5 0 2.71
Rubicon Technology 0 0 0 0 N/A

NeoPhotonics presently has a consensus target price of $8.86, suggesting a potential upside of 14.29%. Given NeoPhotonics’ higher possible upside, analysts clearly believe NeoPhotonics is more favorable than Rubicon Technology.

Summary

NeoPhotonics beats Rubicon Technology on 7 of the 11 factors compared between the two stocks.

NeoPhotonics Company Profile

NeoPhotonics Corporation develops, manufactures, and sells optoelectronic products that transmit, receive, and switch high speed digital optical signals for communications networks. It offers high speed products, including transmitter, receiver, and switching products for 100G (gigabits per second) and optical transmission applications over distances of 2 to 2,000 kilometers; optical components for coherent systems, including narrow linewidth tunable transmit and local oscillator lasers (NLW-ITLA) that generate ultra-pure wavelength or color for coherent transmission, as well as coherent micro-modulators, which encode the information on the intensity and phase of the optical beam; and integrated coherent receivers (ICRs) that decode the phase and polarization encoded coherent signals. The company also engages in developing pluggable coherent modules that combine NLW-ITLA with ICR and a coherent modulator; and offers 100G products for the client side and datacenter applications. In addition, it offers network products and solutions, including application-specific passive optical functionalities in modules or sub-system configurations; transceiver modules for various low speed access and mobile backhaul applications; and products for test and measurement, instrumentation, industrial, and research applications. The company sells its products to network equipment manufacturers through a direct sales force in North America, Europe, and Asia. The company was formerly known as NanoGram Corporation and changed its name to NeoPhotonics Corporation in 2002. NeoPhotonics Corporation was founded in 1996 and is headquartered in San Jose, California.

Rubicon Technology Company Profile

Rubicon Technology, Inc. provides monocrystalline sapphire for applications in optical and industrial systems. It offers optical and industrial sapphire products in various shapes and sizes, including round and rectangular windows and wafers, domes, tubes, and rods for a range of end markets comprising defense and aerospace, specialty lighting, instrumentation, sensors and detectors, semiconductor process equipment, electronic substrates, medical, and laser applications. The company markets and sells its products through its direct sales force in North America, Europe, and Asia. Its principal customers include defense subcontractors, industrial manufacturers, fabricators, and resellers. The company was founded in 2001 and is headquartered in Bensenville, Illinois.

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