Critical Analysis: OSI Systems (OSIS) versus Solaredge Technologies (SEDG)

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OSI Systems (NASDAQ:OSIS) and Solaredge Technologies (NASDAQ:SEDG) are both small-cap computer and technology companies, but which is the better stock? We will contrast the two businesses based on the strength of their earnings, valuation, dividends, risk, profitability, analyst recommendations and institutional ownership.

Risk & Volatility

OSI Systems has a beta of 1.12, meaning that its share price is 12% more volatile than the S&P 500. Comparatively, Solaredge Technologies has a beta of 0.2, meaning that its share price is 80% less volatile than the S&P 500.

Analyst Recommendations

This is a summary of recent ratings and recommmendations for OSI Systems and Solaredge Technologies, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
OSI Systems 0 1 3 0 2.75
Solaredge Technologies 2 1 9 0 2.58

OSI Systems currently has a consensus price target of $95.00, indicating a potential upside of 9.51%. Solaredge Technologies has a consensus price target of $54.42, indicating a potential upside of 36.97%. Given Solaredge Technologies’ higher probable upside, analysts plainly believe Solaredge Technologies is more favorable than OSI Systems.

Earnings & Valuation

This table compares OSI Systems and Solaredge Technologies’ revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
OSI Systems $1.09 billion 1.44 -$29.12 million $3.61 24.03
Solaredge Technologies $937.24 million 2.00 $128.83 million $2.69 14.77

Solaredge Technologies has lower revenue, but higher earnings than OSI Systems. Solaredge Technologies is trading at a lower price-to-earnings ratio than OSI Systems, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares OSI Systems and Solaredge Technologies’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
OSI Systems 3.22% 14.93% 5.53%
Solaredge Technologies 13.75% 25.33% 15.47%

Institutional & Insider Ownership

98.5% of OSI Systems shares are owned by institutional investors. Comparatively, 83.9% of Solaredge Technologies shares are owned by institutional investors. 8.6% of OSI Systems shares are owned by insiders. Comparatively, 9.7% of Solaredge Technologies shares are owned by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.

Summary

Solaredge Technologies beats OSI Systems on 8 of the 14 factors compared between the two stocks.

About OSI Systems

OSI Systems, Inc. designs, manufactures, and sells electronic systems and components worldwide. The company's Security segment offers baggage and parcel inspection, cargo and vehicle inspection, hold baggage and people screening, radiation detection, and explosive and narcotics trace detection systems under the Rapiscan Systems and AS&E names. It also provides site design, installation, training, and technical support services; and turnkey security screening solutions under the S2 name. The company's Healthcare segment offers patient monitoring, diagnostic cardiology, and anesthesia delivery and ventilation systems, as well as related supplies and accessories under the Spacelabs name for use in critical care, emergency, and perioperative areas within hospitals, as well as physicians' offices, medical clinics, and ambulatory surgery centers. Its Optoelectronics and Manufacturing segment provides optoelectronic devices primarily under the OSI Optoelectronics, OSI LaserDiode, and OSI Laserscan names for the aerospace and defense, avionics, medical imaging and diagnostics, biochemistry analysis, pharmaceutical, nanotechnology, telecommunications, construction, and homeland security markets. It also offers electronics manufacturing services to original equipment manufacturers and end users for medical, automotive, defense, aerospace, industrial, and consumer applications primarily under the OSI Electronics, APlus Products, Altaflex, and PFC names; and LCD displays for medical, industrial, and consumer electronics applications, as well as flex circuits and touch panels. In addition, this segment offers laser-based remote sensing devices to detect and classify vehicles in toll and traffic management systems under the OSI Laserscan and Autosense names; and solid-state laser products for aerospace, defense, telecommunication, and medical applications under the OSI LaserDiode name. The company was founded in 1987 and is headquartered in Hawthorne, California.

About Solaredge Technologies

SolarEdge Technologies, Inc., together with its subsidiaries, designs, develops, and sells direct current (DC) optimized inverter systems for solar photovoltaic (PV) installations in Israel, the United States, the Netherlands, Europe, and internationally. The company's DC optimized inverter systems include power optimizers and inverters, as well as a cloud-based monitoring platform. Its products are used in a range of solar market segments, such as residential, commercial, and small utility-scale solar installations. The company sells its products directly to solar installers, as well as engineering, procurement, and construction firms; and indirectly to solar installers through distributors and electrical equipment wholesalers, as well as PV module manufacturers. SolarEdge Technologies, Inc. was founded in 2006 and is headquartered in Herzliya, Israel.

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