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

Risk & Volatility

OSI Systems has a beta of 0.98, suggesting that its stock price is 2% less volatile than the S&P 500. Comparatively, AXT has a beta of 1.18, suggesting that its stock price is 18% more volatile than the S&P 500.

Insider & Institutional Ownership

97.3% of OSI Systems shares are held by institutional investors. Comparatively, 56.0% of AXT shares are held by institutional investors. 8.6% of OSI Systems shares are held by company insiders. Comparatively, 7.0% of AXT shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock will outperform the market over the long term.

Valuation & Earnings

This table compares OSI Systems and AXT’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
OSI Systems $1.09 billion 1.19 -$29.12 million $3.61 19.80
AXT $98.67 million 2.10 $10.14 million $0.26 20.15

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

Profitability

This table compares OSI Systems and AXT’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
OSI Systems -2.72% 14.08% 5.26%
AXT 13.00% 7.32% 6.38%

Analyst Recommendations

This is a breakdown of current recommendations for OSI Systems and AXT, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
OSI Systems 0 2 2 0 2.50
AXT 0 0 3 0 3.00

OSI Systems presently has a consensus price target of $83.83, suggesting a potential upside of 17.27%. AXT has a consensus price target of $8.50, suggesting a potential upside of 62.21%. Given AXT’s stronger consensus rating and higher possible upside, analysts clearly believe AXT is more favorable than OSI Systems.

Summary

AXT beats OSI Systems on 9 of the 14 factors compared between the two stocks.

OSI Systems Company Profile

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.

AXT Company Profile

AXT, Inc. designs, develops, manufactures, and distributes compound and single element semiconductor substrates. It manufactures semiconductor substrates using its proprietary vertical gradient freeze technology. The company offers indium phosphide (InP) for use in fiber optic lasers and detectors, passive optical networks, data center connectivity, silicon photonics, photonic integrated circuits, terrestrial solar cells, lasers, military wireless RF amplifiers, infrared motion control, and infrared thermal imaging products. It also provides semi-insulating gallium with arsenic (GaAs) substrates, which are used for application in power amplifiers for wireless devices, and transistors and solar cells for drones. In addition, the company offers semi-conducting GaAs substrates that are used in opto-electronic products, including high brightness light emitting diodes in backlight wireless handsets and liquid crystal display televisions, as well as for automotive panel, signage, display, and lighting applications; and 3-D sensing using vertical cavity surface emitting lasers. Further, it provides germanium (Ge) substrates for space and terrestrial photovoltaic applications, as well as optical applications. Additionally, the company, through its subsidiaries and joint ventures, manufactures and sells raw materials, such as gallium, gallium alloys, InP poly-crystal, arsenic, Ge, Ge dioxide, high purity arsenic, pyrolytic boron nitride crucibles, and boron oxide. It sells its products through direct sales force in the United States, China, and Europe, as well as through independent sales representatives and distributors in Japan, Taiwan, Korea, and internationally. The company was formerly known as American Xtal Technology, Inc. and changed its name to AXT, Inc. in July 2000. AXT, Inc. was founded in 1986 and is headquartered in Fremont, California.

Receive News & Ratings for OSI Systems Daily - Enter your email address below to receive a concise daily summary of the latest news and analysts' ratings for OSI Systems and related companies with MarketBeat.com's FREE daily email newsletter.