Contrasting Echelon Corporation (ELON) & ModusLink Global Solutions (MLNK)

ModusLink Global Solutions (NASDAQ: MLNK) and Echelon Corporation (NASDAQ:ELON) are both small-cap computer and technology companies, but which is the superior stock? We will compare the two companies based on the strength of their valuation, earnings, risk, dividends, institutional ownership, analyst recommendations and profitability.

Analyst Ratings

This is a breakdown of current ratings and recommmendations for ModusLink Global Solutions and Echelon Corporation, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
ModusLink Global Solutions 0 1 0 0 2.00
Echelon Corporation 0 0 0 0 N/A

ModusLink Global Solutions presently has a consensus target price of $8.00, indicating a potential upside of 351.98%. Given ModusLink Global Solutions’ higher probable upside, equities research analysts clearly believe ModusLink Global Solutions is more favorable than Echelon Corporation.

Valuation & Earnings

This table compares ModusLink Global Solutions and Echelon Corporation’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio NetIncome Earnings Per Share Price/Earnings Ratio
ModusLink Global Solutions $436.62 million 0.23 -$25.82 million ($0.47) -3.77
Echelon Corporation $32.38 million 0.63 -$4.10 million ($1.05) -4.32

Echelon Corporation has higher revenue, but lower earnings than ModusLink Global Solutions. Echelon Corporation is trading at a lower price-to-earnings ratio than ModusLink Global Solutions, indicating that it is currently the more affordable of the two stocks.

Insider & Institutional Ownership

56.5% of ModusLink Global Solutions shares are owned by institutional investors. Comparatively, 20.1% of Echelon Corporation shares are owned by institutional investors. 1.3% of ModusLink Global Solutions shares are owned by insiders. Comparatively, 10.2% of Echelon Corporation shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock is poised for long-term growth.

Profitability

This table compares ModusLink Global Solutions and Echelon Corporation’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
ModusLink Global Solutions -5.92% -36.62% -8.36%
Echelon Corporation -14.96% -18.48% -13.66%

Volatility & Risk

ModusLink Global Solutions has a beta of 0.87, suggesting that its share price is 13% less volatile than the S&P 500. Comparatively, Echelon Corporation has a beta of -0.67, suggesting that its share price is 167% less volatile than the S&P 500.

Summary

ModusLink Global Solutions beats Echelon Corporation on 7 of the 11 factors compared between the two stocks.

ModusLink Global Solutions Company Profile

ModusLink Global Solutions, Inc. is a provider of supply chain and logistics services through its subsidiaries, ModusLink Corporation and ModusLink PTS, Inc. The Company provides services to companies in the consumer electronics, communications, computing, software, storage and retail industries. The Company operates through four segments: Americas, Asia, Europe and e-business. As of July 31, 2016, the Company operated in over 20 sites across North America, Europe and the Asia Pacific region. The Company’s Supply Chain Business operation’s solutions include material planning and factory supply; value-added warehousing and distribution; aftermarket services, including product returns management and product repair and recovery, and e-business, including e-commerce, contact center, entitlement management and financial management.

Echelon Corporation Company Profile

Echelon Corporation develops open-standard control networking platforms and delivers elements necessary to design, install, monitor and control communities of devices. The Company’s products enable everyday devices, such as air conditioners, outdoor lighting, appliances, electricity meters, light switches, thermostats and valves to be inter-connected and be part of the Industrial Internet of Things (IIoT) market. It operates through the IIoT segment. Its IIoT business sells products and services that form embedded control platforms, such as LONWORKS and IzoT. The Company’s IIoT business also sells products and services, which include components, control nodes and development software. The Company also offers a solution consisting of outdoor lighting controllers, segment controllers, gateways and software to end customers, such as municipalities, cities, campuses and commercial enterprises. The Company markets its products under the Echelon brand.

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