Sono-Tek (NASDAQ:SOTK – Get Free Report) and Allegro MicroSystems (NASDAQ:ALGM – Get Free Report) are both computer and technology companies, but which is the better investment? We will compare the two companies based on the strength of their analyst recommendations, valuation, profitability, dividends, earnings, institutional ownership and risk.
Analyst Recommendations
This is a breakdown of current ratings for Sono-Tek and Allegro MicroSystems, as reported by MarketBeat.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| Sono-Tek | 0 | 2 | 0 | 0 | 2.00 |
| Allegro MicroSystems | 1 | 1 | 10 | 0 | 2.75 |
Sono-Tek presently has a consensus target price of $8.50, indicating a potential upside of 58.88%. Allegro MicroSystems has a consensus target price of $54.30, indicating a potential downside of 2.20%. Given Sono-Tek’s higher probable upside, equities research analysts plainly believe Sono-Tek is more favorable than Allegro MicroSystems.
Earnings and Valuation
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| Sono-Tek | $20.91 million | 4.02 | $1.81 million | $0.11 | 48.64 |
| Allegro MicroSystems | $890.10 million | 11.62 | -$14.90 million | ($0.09) | -616.89 |
Sono-Tek has higher earnings, but lower revenue than Allegro MicroSystems. Allegro MicroSystems is trading at a lower price-to-earnings ratio than Sono-Tek, indicating that it is currently the more affordable of the two stocks.
Institutional and Insider Ownership
47.9% of Sono-Tek shares are owned by institutional investors. Comparatively, 56.5% of Allegro MicroSystems shares are owned by institutional investors. 5.5% of Sono-Tek shares are owned by company insiders. Comparatively, 0.4% of Allegro MicroSystems shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company is poised for long-term growth.
Profitability
This table compares Sono-Tek and Allegro MicroSystems’ net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| Sono-Tek | 8.64% | 9.52% | 7.45% |
| Allegro MicroSystems | -1.67% | 6.09% | 4.11% |
Volatility & Risk
Sono-Tek has a beta of -0.03, suggesting that its stock price is 103% less volatile than the S&P 500. Comparatively, Allegro MicroSystems has a beta of 1.98, suggesting that its stock price is 98% more volatile than the S&P 500.
Summary
Sono-Tek beats Allegro MicroSystems on 8 of the 14 factors compared between the two stocks.
About Sono-Tek
Sono-Tek Corporation designs and manufactures ultrasonic coating systems for applying on parts and components for the microelectronics/electronics, alternative energy, medical, industrial, and research and development/other markets worldwide. The company also designs and manufactures custom-engineered ultrasonic coating systems; and provides nozzles and generators for manufacturers' equipment. Its products include integrated multi-axis coating systems, integrated coating systems, fluxing systems, OEM systems, and other related systems. In addition, the company provides surface coating solutions and application consulting services. It markets and distributes its products through direct sales personnel, select independent distributors, and sales representatives. The company was incorporated in 1975 and is based in Milton, New York.
About Allegro MicroSystems
Allegro MicroSystems, Inc., together with its subsidiaries, designs, develops, manufactures, and markets sensor integrated circuits (ICs) and application-specific analog power ICs for motion control and energy-efficient systems. Its products include magnetic sensor ICs, such as position, speed, and current sensor ICs; and power ICs comprising motor driver ICs, regulator and LED driver ICs, and isolated gate drivers. The company sells its products to original equipment manufacturers and distributors primarily in the automotive and industrial markets through its direct sales force, third party distributors, independent sales representatives, and consignment. It operates in the United States, rest of the Americas, Europe, Japan, Greater China, South Korea, and other Asian markets. The company was founded in 1990 and is headquartered in Manchester, New Hampshire. Allegro MicroSystems, Inc. is a subsidiary of Sanken Electric Co., Ltd.
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