Head-To-Head Analysis: Fabrinet (NYSE:FN) & Novanta (NASDAQ:NOVT)

Novanta (NASDAQ:NOVT) and Fabrinet (NYSE:FN) are both technology companies, but which is the superior business? We will compare the two companies based on the strength of their dividends, earnings, institutional ownership, risk, profitability, valuation and analyst recommendations.

Profitability

This table compares Novanta and Fabrinet’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Novanta	6.00%	10.83%	7.53%
Fabrinet	10.19%	21.23%	13.96%

Insider and Institutional Ownership

98.3% of Novanta shares are held by institutional investors. Comparatively, 97.4% of Fabrinet shares are held by institutional investors. 1.2% of Novanta shares are held by company insiders. Comparatively, 0.2% of Fabrinet shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock is poised for long-term growth.

Valuation & Earnings

This table compares Novanta and Fabrinet”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Novanta	$1.03 billion	5.19	$53.83 million	$1.56	90.56
Fabrinet	$4.64 billion	3.76	$473.03 million	$13.05	37.36

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

Volatility and Risk

Novanta has a beta of 1.72, indicating that its stock price is 72% more volatile than the S&P 500. Comparatively, Fabrinet has a beta of 1.23, indicating that its stock price is 23% more volatile than the S&P 500.

Analyst Ratings

This is a breakdown of current recommendations for Novanta and Fabrinet, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Novanta	0	2	1	0	2.33
Fabrinet	0	3	6	1	2.80

Novanta currently has a consensus price target of $194.00, suggesting a potential upside of 37.32%. Fabrinet has a consensus price target of $649.50, suggesting a potential upside of 33.23%. Given Novanta’s higher possible upside, research analysts clearly believe Novanta is more favorable than Fabrinet.

Summary

Fabrinet beats Novanta on 9 of the 15 factors compared between the two stocks.

About Novanta

Novanta, Inc. engages in the provision of core technology solutions to healthcare and advanced industrial original equipment manufacturers. It operates through the following segments: Photonics, Vision, and Precision Motion. The Photonics segment designs, manufactures, and markets photonics-based solutions, including laser scanning and laser beam delivery, CO2 laser, continuous wave and ultrafast laser, and optical light engine products. The Vision segment offers a range of medical grade technologies, including medical insufflators, pumps and related disposables, surgical displays and operating room integration technologies, optical data collection and machine vision technologies, radio frequency identification technologies, thermal printers, spectrometry technologies, and embedded touch screen solutions. The Precision Motion segment includes optical encoders, precision motor and motion control technology, air bearing spindles, and precision machined components to customers. The company was founded in 1968 and is headquartered in Bedford, MA.

About Fabrinet

Fabrinet provides optical packaging and precision optical, electro-mechanical, and electronic manufacturing services in North America, the Asia-Pacific, and Europe. The company offers a range of advanced optical and electro-mechanical capabilities in the manufacturing process, including process design and engineering, supply chain management, manufacturing, printed circuit board assembly, advanced packaging, integration, final assembly, and testing. Its products include switching products, including reconfigurable optical add-drop multiplexers, optical amplifiers, modulators, and other optical components and modules that enable network managers to route voice, video, and data communications traffic through fiber optic cables at various wavelengths, speeds, and over various distances. The company's products also comprise tunable lasers, transceivers, and transponders; and active optical cables, which provide high-speed interconnect capabilities for data centers and computing clusters, as well as Infiniband, Ethernet, fiber channel, and optical backplane connectivity. In addition, it provides solid state, diode-pumped, gas, and fiber lasers used in semiconductor processing, biotechnology and medical device, metrology, and material processing industries; and differential pressure, micro-gyro, fuel, and other sensors used in automobiles, as well as non-contact temperature measurement sensors for the medical industry. Further, the company designs and fabricates application-specific crystals, lenses, prisms, mirrors, laser components, and substrates; and other custom and standard borosilicate, clear fused quartz, and synthetic fused silica glass products. It serves original equipment manufacturers of optical communication components, modules and sub-systems, industrial lasers, automotive components, medical devices, and sensors. The company was incorporated in 1999 and is based in Grand Cayman, the Cayman Islands.