Image Sensing Systems (NASDAQ: ISNS) and EXFO (NASDAQ:EXFO) are both small-cap computer and technology companies, but which is the better stock? We will compare the two businesses based on the strength of their profitabiliy, dividends, institutional ownership, risk, valuation, earnings and analyst recommendations.

Insider and Institutional Ownership

15.7% of Image Sensing Systems shares are owned by institutional investors. Comparatively, 16.6% of EXFO shares are owned by institutional investors. 5.0% of Image Sensing Systems shares are owned by company insiders. Comparatively, 20.0% of EXFO shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company will outperform the market over the long term.

Analyst Recommendations

This is a summary of recent ratings and target prices for Image Sensing Systems and EXFO, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Image Sensing Systems 0 0 0 0 N/A
EXFO 0 4 1 0 2.20

EXFO has a consensus target price of $5.70, suggesting a potential upside of 48.05%. Given EXFO’s higher possible upside, analysts plainly believe EXFO is more favorable than Image Sensing Systems.

Valuation & Earnings

This table compares Image Sensing Systems and EXFO’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Image Sensing Systems $13.99 million 1.23 $1.46 million $0.23 14.57
EXFO $243.18 million 0.87 $17.91 million $0.04 96.27

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

Profitability

This table compares Image Sensing Systems and EXFO’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Image Sensing Systems 8.41% 19.76% 14.74%
EXFO 0.93% 2.76% 2.10%

Volatility & Risk

Image Sensing Systems has a beta of 0.45, indicating that its share price is 55% less volatile than the S&P 500. Comparatively, EXFO has a beta of 0.55, indicating that its share price is 45% less volatile than the S&P 500.

Summary

EXFO beats Image Sensing Systems on 8 of the 13 factors compared between the two stocks.

Image Sensing Systems Company Profile

Image Sensing Systems, Inc. is a provider of software-based products and solutions for the intelligent transportation systems (ITS) industry. The Company develops and markets video and radar processing products for use in traffic, security, police and parking applications, such as intersection control, highway, bridge and tunnel traffic management, venue security, entry control and traffic data collection. The Company operates through two segments: Intersection and Highway. Video products are sold in the Intersection segment. Radar products are sold in the Highway segment. The Company’s family of products, which it markets as Autoscope video or video products (Autoscope) and RTMS radar or radar products (RTMS), provides end users with the tools that manage traffic flow and support driver safety. Its technology analyzes signals from sensors and transmits the information to management systems and controllers or directly to users.

EXFO Company Profile

EXFO Inc is a Canada-based company, which provides communications service providers (CSPs) and data center, cloud and Web-scale operators with field test, service assurance and analytics solutions to ensure the deployment, maintenance and management of physical, virtual, fixed and mobile networks. It focuses on network infrastructures: fourth generation (4G)/long-term evolution (LTE), wireless backhaul, small cells and distributed antenna systems (DAS), 100G network upgrades and fiber-to-the-home (FTTH)/fiber-to-the-curb (FTTC)/fiber-to-the-node (FTTN) deployments. It offers a range of wire line and wireless tests, service assurance and analytics solutions to the global telecommunications industry. Its products include TestFlow; LTB-8 platform; a family of optical time domain reflect meters (OTDRs); iSAM; MaxTester-940 Fiber Certifier optical loss test set (OLTS) for data center and enterprise markets, and the G.fast handheld test set.

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