Comparing Allegro MicroSystems (NASDAQ:ALGM) & nLIGHT (NASDAQ:LASR)

Allegro MicroSystems (NASDAQ:ALGM) and nLIGHT (NASDAQ:LASR) are both computer and technology companies, but which is the superior stock? We will contrast the two companies based on the strength of their earnings, analyst recommendations, institutional ownership, profitability, valuation, dividends and risk.

Analyst Ratings

This is a breakdown of recent recommendations and price targets for Allegro MicroSystems and nLIGHT, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Allegro MicroSystems	0	1	8	0	2.89
nLIGHT	0	0	2	0	3.00

Allegro MicroSystems currently has a consensus target price of $34.44, indicating a potential upside of 56.00%. nLIGHT has a consensus target price of $16.00, indicating a potential upside of 53.55%. Given Allegro MicroSystems’ higher probable upside, equities research analysts plainly believe Allegro MicroSystems is more favorable than nLIGHT.

Earnings and Valuation

This table compares Allegro MicroSystems and nLIGHT”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Allegro MicroSystems	$937.99 million	4.56	$152.70 million	$0.78	28.31
nLIGHT	$197.56 million	2.51	-$41.67 million	($1.02)	-10.22

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

Profitability

This table compares Allegro MicroSystems and nLIGHT’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Allegro MicroSystems	7.91%	13.88%	10.65%
nLIGHT	-25.62%	-19.58%	-16.06%

Volatility & Risk

Allegro MicroSystems has a beta of 1.68, suggesting that its share price is 68% more volatile than the S&P 500. Comparatively, nLIGHT has a beta of 2.36, suggesting that its share price is 136% more volatile than the S&P 500.

Insider and Institutional Ownership

56.5% of Allegro MicroSystems shares are held by institutional investors. Comparatively, 83.9% of nLIGHT shares are held by institutional investors. 0.5% of Allegro MicroSystems shares are held by company insiders. Comparatively, 6.1% of nLIGHT shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company will outperform the market over the long term.

Summary

Allegro MicroSystems beats nLIGHT on 10 of the 14 factors compared between the two stocks.

About Allegro MicroSystems

Allegro MicroSystems, Inc., together with its subsidiaries, designs, develops, manufactures, and markets sensor integrated circuits (ICs) and application-specific analog power ICs for motion control and energy-efficient systems. Its products include magnetic sensor ICs, such as position, speed, and current sensor ICs; power ICs comprising motor driver ICs, regulator and LED driver ICs, and isolated gate drivers; and photonic and advanced 3D sensing components. The company sells its products to original equipment manufacturers and suppliers primarily in the automotive and industrial markets through its direct sales force, third party distributors, independent sales representatives, and consignment. It operates in the United States, rest of the Americas, Europe, Japan, Greater China, South Korea, and other Asian markets. The company was founded in 1990 and is headquartered in Manchester, New Hampshire. Allegro MicroSystems, Inc. is a subsidiary of Sanken Electric Co., Ltd.

About nLIGHT

nLIGHT, Inc. designs, develops, manufactures, and sells semiconductor and fiber lasers for industrial, microfabrication, and aerospace and defense applications. The company operates in two segments, Laser Products and Advanced Development. It offers semiconductor lasers with various ranges of power levels, wavelengths, and output fiber sizes; and programmable and serviceable fiber lasers for use in industrial and aerospace and defense applications. The company also provides laser sensors, including light detection and ranging technologies for intelligence, surveillance, and reconnaissance applications; and fiber amplifiers, beam combination, and control systems for use in high-energy laser systems in directed energy applications. It sells its products through direct sales force in the United States, China, South Korea, and European countries, as well as through independent sales representatives and distributors in Asia, Australia, Europe, the Middle East, and South America. The company was formerly known as nLight Photonics Corporation and changed its name to nLIGHT, Inc. in January 2016. nLIGHT, Inc. was incorporated in 2000 and is headquartered in Camas, Washington.