Critical Analysis: Richardson Electronics (NASDAQ:RELL) and Hoya (OTCMKTS:HOCPY)

Hoya (OTCMKTS:HOCPY) and Richardson Electronics (NASDAQ:RELL) are both technology companies, but which is the superior investment? We will compare the two companies based on the strength of their dividends, risk, profitability, earnings, analyst recommendations, institutional ownership and valuation.

Valuation & Earnings

This table compares Hoya and Richardson Electronics”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Hoya	$5.88 billion	9.59	$1.58 billion	$5.04	33.45
Richardson Electronics	$228.56 million	1.28	$6.38 million	$0.58	33.98

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

Volatility and Risk

Hoya has a beta of 0.97, indicating that its share price is 3% less volatile than the S&P 500. Comparatively, Richardson Electronics has a beta of 1.32, indicating that its share price is 32% more volatile than the S&P 500.

Dividends

Hoya pays an annual dividend of $1.64 per share and has a dividend yield of 1.0%. Richardson Electronics pays an annual dividend of $0.24 per share and has a dividend yield of 1.2%. Hoya pays out 32.5% of its earnings in the form of a dividend. Richardson Electronics pays out 41.4% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years.

Insider and Institutional Ownership

0.1% of Hoya shares are held by institutional investors. Comparatively, 72.0% of Richardson Electronics shares are held by institutional investors. 31.7% of Richardson Electronics shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Analyst Ratings

This is a summary of current ratings and price targets for Hoya and Richardson Electronics, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Hoya	0	0	0	1	4.00
Richardson Electronics	0	1	2	0	2.67

Richardson Electronics has a consensus target price of $26.00, suggesting a potential upside of 31.91%. Given Richardson Electronics’ higher possible upside, analysts clearly believe Richardson Electronics is more favorable than Hoya.

Profitability

This table compares Hoya and Richardson Electronics’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Hoya	27.58%	25.78%	20.41%
Richardson Electronics	3.57%	4.82%	3.85%

Summary

Hoya beats Richardson Electronics on 10 of the 17 factors compared between the two stocks.

About Hoya

HOYA Corporation, a med-tech company, provides high-tech and medical products worldwide. It operates through three segments: Life Care, Telecommunication, and Other. The company offers life care products, including eyeglass and contact lenses; medical endoscopes; intraocular lenses; laparoscopic surgical instruments; automatic endoscope cleaning equipment; and other medical related products, such as prosthetic ceramic fillers and metallic implants for orthopedics. It also operates Eyecity, a specialty retailer of contact lenses. In addition, the company provides information technology products, such as mask blanks and photomasks for manufacturing semiconductor chips; glass disks for hard disk drives; and imaging products that include optical glasses/optical lenses, colored glass filters, and laser equipment/UV light resources. Further, it engages in the research, development, manufacture, and sale of photomasks for manufacturing flat panel displays. Additionally, the company offers ReadSpeaker, a speech synthesis software; and cloud services comprising Kinnosuke, a time and attendance management service, as well as Yonosuke, an electronic payslip service. HOYA Corporation was founded in 1941 and is headquartered in Tokyo, Japan.

About Richardson Electronics

Richardson Electronics, Ltd. engages in the provision of engineered solutions, power grid and microwave tube, and related consumables worldwide. The Power and Microwave Technologies segment manufactures electron tubes and radio frequency (RF), microwave and power components used in semiconductor manufacturing equipment, RF, and wireless and industrial power applications, as well as various applications including broadcast transmission, CO2 laser cutting, diagnostic imaging, dielectric and induction heating, energy transfer, high voltage switching, plasma, power conversion, radar, and radiation oncology. This segment also provides thyratrons and rectifiers, power tubes, ignitrons, magnetrons, phototubes, microwave generators, ultracapacitor modules, and liquid crystal display monitors under the Amperex, Cetron, and National brands. The Green Energy Solutions segment offers design-in support, systems integration, prototype design and manufacturing, testing, logistics and aftermarket, and technical service and repair services for various applications, such as wind, solar, hydrogen, and electric vehicles; and other power management applications that support green solutions including synthetic diamond manufacturing. The Canvys segment provides custom display solutions, which includes touch screens, protective panels, custom enclosures, All-In-One computers, specialized cabinet finishes and application specific software packages, and certification services. The Healthcare segment provides diagnostic imaging replacement parts for CT and MRI systems, replacement CT and MRI tubes, CT service training, MRI and RF amplifiers, hydrogen thyratrons, klystrons, magnetrons, flat panel detector upgrades, pre-owned CT systems, and additional replacement solutions. It serves energy, healthcare, aviation, broadcast, communications, industrial, marine, medical, military, scientific, and semiconductor markets. The company was founded in 1947 and is headquartered in LaFox, Illinois.