Reviewing Surge Component (OTCMKTS:SPRS) & Nortech Systems (NASDAQ:NSYS)

Surge Component (OTCMKTS:SPRS) and Nortech Systems (NASDAQ:NSYS) are both small-cap computer and technology companies, but which is the superior business? We will compare the two businesses based on the strength of their earnings, analyst recommendations, risk, institutional ownership, valuation, dividends and profitability.

Analyst Ratings

This is a breakdown of recent recommendations for Surge Component and Nortech Systems, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Surge Component	0	0	0	0	0.00
Nortech Systems	1	0	0	0	1.00

Profitability

This table compares Surge Component and Nortech Systems’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Surge Component	2.56%	4.49%	3.47%
Nortech Systems	-2.25%	-7.93%	-3.56%

Earnings and Valuation

This table compares Surge Component and Nortech Systems”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Surge Component	$31.21 million	0.58	$830,000.00	$0.15	20.80
Nortech Systems	$116.67 million	0.17	-$1.29 million	($0.95)	-7.35

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

Risk & Volatility

Surge Component has a beta of 0.42, meaning that its stock price is 58% less volatile than the S&P 500. Comparatively, Nortech Systems has a beta of 0.14, meaning that its stock price is 86% less volatile than the S&P 500.

Insider and Institutional Ownership

3.0% of Nortech Systems shares are owned by institutional investors. 56.0% of Surge Component shares are owned by company insiders. Comparatively, 11.0% of Nortech Systems shares are owned by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company is poised for long-term growth.

Summary

Surge Component beats Nortech Systems on 9 of the 12 factors compared between the two stocks.

About Surge Component

Surge Components, Inc., together with its subsidiaries, supplies electronic products and components. It offers capacitors, which are electrical energy storage devices; and discrete semiconductor components, such as rectifiers, transistors, diodes, circuit protection devices, and audible components comprising audible transducers, Piezo buzzers, speakers, and microphones. The company also provides resonators, alarms, chimes, filters, and discriminators, as well as fuses, printed circuit boards, and switches. Its products are used in the electronic circuitry of various industries, including automotive, computer, communications, cellular telephones, consumer electronics, garage door openers, security equipment, audio equipment, telecom products, computer related products, power supply products, utility meters, and household appliances. The company sells its products to original equipment manufacturers and distributors through independent sales representatives or organizations in Canada, China, other Asian countries, South America, and Europe. Surge Components, Inc. was incorporated in 1981 and is headquartered in Deer Park, New York.

About Nortech Systems

Nortech Systems Incorporated provides design and manufacturing solutions for electromedical devices, electromechanical systems, assemblies, and components in the United States, Mexico, and China. It offers a range of technical and manufacturing, and support services, including project management, designing, testing, prototyping, manufacturing, supply chain management, and post-market services. The company also provides manufacturing and engineering services for medical devices, printed circuit board assemblies, wire and cable assemblies, and higher-level electromechanical assemblies. In addition, it offers engineering and repair services. The company serves original equipment manufacturers in the medical, aerospace and defense, and industrial markets through business development teams and independent manufacturers' representatives. Nortech Systems Incorporated was founded in 1990 and is headquartered in Maple Grove, Minnesota.