Wetouch Technology (NASDAQ:WETH) and Neonode (NASDAQ:NEON) Critical Review

Wetouch Technology (NASDAQ:WETH) and Neonode (NASDAQ:NEON) are both small-cap computer and technology companies, but which is the better investment? We will compare the two businesses based on the strength of their risk, analyst recommendations, profitability, dividends, institutional ownership, earnings and valuation.

Earnings and Valuation

This table compares Wetouch Technology and Neonode”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Wetouch Technology	$45.14 million	0.37	$7.16 million	$0.71	1.96
Neonode	$2.06 million	13.93	$8.49 million	($0.32)	-5.34

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

Profitability

This table compares Wetouch Technology and Neonode’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Wetouch Technology	18.34%	6.18%	5.99%
Neonode	386.64%	-34.66%	-30.25%

Volatility & Risk

Wetouch Technology has a beta of 0.75, indicating that its stock price is 25% less volatile than the S&P 500. Comparatively, Neonode has a beta of 0.97, indicating that its stock price is 3% less volatile than the S&P 500.

Analyst Ratings

This is a summary of recent recommendations and price targets for Wetouch Technology and Neonode, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Wetouch Technology	0	1	0	0	2.00
Neonode	1	1	0	0	1.50

Neonode has a consensus price target of $6.00, indicating a potential upside of 250.88%. Given Neonode’s higher possible upside, analysts clearly believe Neonode is more favorable than Wetouch Technology.

Institutional and Insider Ownership

11.6% of Neonode shares are held by institutional investors. 0.1% of Wetouch Technology shares are held by insiders. Comparatively, 23.9% of Neonode shares are held by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.

Summary

Neonode beats Wetouch Technology on 7 of the 13 factors compared between the two stocks.

About Wetouch Technology

Wetouch Technology Inc. engages in the research, development, manufacture, sale, and servicing of medium to large sized projected capacitive touchscreens in the Peoples Republic of China, Taiwan, South Korea, and internationally. The company offers various touch panels, including glass-glass, which are primarily used in GPS/car entertainment panels in mid-size and luxury cars, industrial human-machine interface (HMI), financial and banking terminals, point of sale, and lottery machines; glass-film-film products that are used in GPS and entertainment panels, industrial HMI, financial and banking terminals, lottery, and gaming industry; plastic-glass for use in GPS/entertainment panels, motor vehicle GPS, smart home products, robots, and charging stations; and glass-films used in industrial HMI. Wetouch Technology Inc. was founded in 2011 and is based in Meishan, China.

About Neonode

Neonode Inc., together with its subsidiaries, develops optical sensing solutions for contactless touch, touch, and gesture sensing in the United States, Japan, South Korea, Germany, Switzerland, France, Sweden, China, and internationally. It also offers software solutions for machine perception to detect and track persons and objects in video streams from cameras and other types of imagers. In addition, the company sells touch sensor modules to OEMs, original design manufacturers, and systems integrators. Further, it licenses its zForce technology to original equipment manufacturers and automotive Tier 1 suppliers, as well as provides non-recurring engineering services related to application development. It serves office equipment, automotive, industrial automation, medical, military, and avionics markets. Neonode Inc. was incorporated in 1997 and is headquartered in Stockholm, Sweden.