Head-To-Head Contrast: Knowles (NYSE:KN) versus Harmonic (NASDAQ:HLIT)

Harmonic (NASDAQ:HLIT) and Knowles (NYSE:KN) are both small-cap computer and technology companies, but which is the superior business? We will contrast the two businesses based on the strength of their dividends, earnings, analyst recommendations, institutional ownership, risk, profitability and valuation.

Analyst Recommendations

This is a summary of recent ratings and price targets for Harmonic and Knowles, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Harmonic	1	2	4	0	2.43
Knowles	0	1	2	0	2.67

Harmonic presently has a consensus price target of $11.6667, indicating a potential upside of 26.95%. Knowles has a consensus price target of $21.00, indicating a potential downside of 2.82%. Given Harmonic’s higher possible upside, equities analysts plainly believe Harmonic is more favorable than Knowles.

Profitability

This table compares Harmonic and Knowles’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Harmonic	9.96%	17.83%	10.23%
Knowles	4.40%	8.22%	5.57%

Institutional & Insider Ownership

99.4% of Harmonic shares are owned by institutional investors. Comparatively, 96.4% of Knowles shares are owned by institutional investors. 1.2% of Harmonic shares are owned by insiders. Comparatively, 2.5% of Knowles shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock will outperform the market over the long term.

Volatility & Risk

Harmonic has a beta of 1, meaning that its share price has a similar volatility profile to the S&P 500.Comparatively, Knowles has a beta of 1.45, meaning that its share price is 45% more volatile than the S&P 500.

Earnings & Valuation

This table compares Harmonic and Knowles”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Harmonic	$678.72 million	1.54	$39.22 million	$0.59	15.58
Knowles	$553.50 million	3.35	-$237.80 million	$0.29	74.51

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

Summary

Harmonic beats Knowles on 9 of the 14 factors compared between the two stocks.

About Harmonic

Harmonic Inc., together with its subsidiaries, provides broadband solutions worldwide. The company operates through Broadband and Video segments. The Broadband segment sells broadband access solutions and related services, including cOS software-based broadband access solutions to broadband operators; and cOS central cloud services, a subscription service for cOS customers. The Video segment sells video processing, production, and playout solutions and services to cable operators, and satellite and telco Pay-TV service providers, as well as to broadcast and media, including streaming media companies. Its video processing appliance solutions include network management and application software, and hardware products, such as encoders, video servers, high-density stream processing systems, and edge processors. This segment also provides VOS360 SaaS platform that provides both streaming and channel origination and distribution services; and software-as-a-service (SaaS) solutions, which enables the packaging and delivery of streaming services, including live streaming, VOD, catch-up TV, start-over TV, network-DVR and cloud-DVR services through HTTP streaming to various device along with dynamic and personal ad insertion. The company also provides technical support and professional services, such as maintenance and support, consulting, implementation, integration services, program management, technical design and planning, building and site preparation, integration and equipment installation, end-to-end system testing, and training, as well as SaaS-related support and deployment. It sells its products through its direct sales force, as well as through independent resellers and systems integrators. The company was incorporated in 1988 and is headquartered in San Jose, California.

About Knowles

Knowles Corporation offers capacitors, radio frequency (RF) filtering products, balanced armature speakers, micro-acoustic microphones, and audio solutions in Asia, the United States, Europe, other Americas, and internationally. It operates through three segments: Precision Devices (PD); Medtech & Specialty Audio (MSA); and Consumer MEMS Microphones (CMM). The PD segment designs and delivers film, electrolytic, and mica capacitor products for use in power supplies and medical implants; electromagnetic interference filters; and RF filtering solutions for use in satellite communications and radar systems for defense applications. The MSA segment designs and manufactures balanced armature speakers and microphones for the hearing health, audio, and True Wireless Stereo (TWS) markets. The CMM segment designs and manufactures micro-electro-mechanical systems (MEMS) microphones and audio solutions used in applications that serve the ear, mobile, TWS, Internet of Things, computing, and smartphones markets. The company serves the defense, medtech, electric vehicle, industrial, communications, and consumer electronics markets through original equipment manufacturers, their contract manufacturers, suppliers, sales representatives, and distributors. Knowles Corporation was founded in 1946 and is headquartered in Itasca, Illinois.