FULGENT GENETIC (NASDAQ: FLGT) and Luna Innovations (NASDAQ:LUNA) are both small-cap medical companies, but which is the better investment? We will contrast the two companies based on the strength of their analyst recommendations, earnings, institutional ownership, profitability, valuation, dividends and risk.

Profitability

This table compares FULGENT GENETIC and Luna Innovations’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
FULGENT GENETIC -0.42% -0.02% -0.02%
Luna Innovations -3.00% -5.00% -3.24%

Institutional and Insider Ownership

16.8% of FULGENT GENETIC shares are owned by institutional investors. Comparatively, 10.0% of Luna Innovations shares are owned by institutional investors. 13.0% of Luna Innovations shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock is poised for long-term growth.

Earnings & Valuation

This table compares FULGENT GENETIC and Luna Innovations’ gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
FULGENT GENETIC $20.81 million 4.24 $2.17 million ($0.38) -13.08
Luna Innovations $57.27 million 0.75 $2.29 million ($0.07) -21.85

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

Analyst Ratings

This is a summary of current ratings and target prices for FULGENT GENETIC and Luna Innovations, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
FULGENT GENETIC 0 0 3 0 3.00
Luna Innovations 0 0 1 0 3.00

FULGENT GENETIC presently has a consensus price target of $10.67, suggesting a potential upside of 114.62%. Luna Innovations has a consensus price target of $3.00, suggesting a potential upside of 96.08%. Given FULGENT GENETIC’s higher possible upside, analysts plainly believe FULGENT GENETIC is more favorable than Luna Innovations.

Summary

FULGENT GENETIC beats Luna Innovations on 7 of the 11 factors compared between the two stocks.

About FULGENT GENETIC

Fulgent Genetics, Inc. is a technology company. The Company offers genetic testing to provide physicians with clinically actionable diagnostic information to improve quality of patient care. The Company has developed a technology platform that integrates data comparison and suppression algorithms, adaptive learning software, advanced genetic diagnostics tools and integrated laboratory processes. As of December 31, 2015, the Company’s test menu includes approximately 18,000 single-gene tests and over 200 pre-established, multi-gene, disease-specific panels that collectively test for approximately 7,500 genetic conditions, including various cancers, cardiovascular diseases and neurological disorders. The Company’s gene probes are specifically engineered to generate genetic data that is optimized for its software, which enables to rapidly incorporate new genes into its test menu, develop new panels of disease-specific tests and customize tests for its customers.

About Luna Innovations

Luna Innovations Incorporated develops, manufactures and markets fiber optic sensing and test, and measurement products. The Company is focused on bringing technology solutions to measure and monitor processes in the aerospace, automotive, energy, composite, telecommunications and defense industries. The Company operates in two business segments: Products and Licensing, and Technology Development. The Products and Licensing segment develops, manufactures and markets its suite of products, including high-speed optical receiver (HSOR), custom optoelectronic subsystems (Optoelectronics), and Terahertz (THz) products, and fiber optic sensing, as well as test and measurement products. The Technology Development segment performs applied research principally in the areas of sensing and instrumentation, advanced materials and health sciences. The Company’s HSOR transmission products are deployed in the Internet communications equipment infrastructure for high-speed bandwidth.

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