Critical Survey: Power Integrations (NASDAQ:POWI) versus OSI Systems (NASDAQ:OSIS)

OSI Systems (NASDAQ:OSIS) and Power Integrations (NASDAQ:POWI) are both mid-cap computer and technology companies, but which is the better stock? We will compare the two businesses based on the strength of their profitability, dividends, risk, institutional ownership, valuation, earnings and analyst recommendations.

Volatility and Risk

OSI Systems has a beta of 1.1, meaning that its stock price is 10% more volatile than the S&P 500. Comparatively, Power Integrations has a beta of 1.1, meaning that its stock price is 10% more volatile than the S&P 500.

Institutional & Insider Ownership

89.2% of OSI Systems shares are held by institutional investors. 5.2% of OSI Systems shares are held by insiders. Comparatively, 1.5% of Power Integrations shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company is poised for long-term growth.

Analyst Ratings

This is a breakdown of current recommendations for OSI Systems and Power Integrations, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
OSI Systems	0	0	5	0	3.00
Power Integrations	0	2	4	1	2.86

OSI Systems currently has a consensus target price of $173.00, indicating a potential upside of 1.47%. Power Integrations has a consensus target price of $78.00, indicating a potential upside of 18.79%. Given Power Integrations’ higher probable upside, analysts plainly believe Power Integrations is more favorable than OSI Systems.

Earnings and Valuation

This table compares OSI Systems and Power Integrations”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
OSI Systems	$1.60 billion	1.78	$128.15 million	$7.66	22.26
Power Integrations	$444.54 million	8.40	$55.74 million	$0.66	99.49

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

Profitability

This table compares OSI Systems and Power Integrations’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
OSI Systems	8.31%	18.17%	7.72%
Power Integrations	9.27%	4.14%	3.77%

Summary

OSI Systems beats Power Integrations on 9 of the 14 factors compared between the two stocks.

About OSI Systems

OSI Systems, Inc. designs and manufactures electronic systems and components. It operates in three segments: Security, Healthcare, and Optoelectronics and Manufacturing. The Security segment offers baggage and parcel inspection, cargo and vehicle inspection, hold baggage and people screening, radiation monitoring, explosive and narcotics trace detection systems, and optical inspection systems under the Rapiscan name. It also provides site design, installation, training, and technical support services; and turnkey security screening solutions under the S2 name. The Healthcare segment offers patient monitoring, cardiology and remote monitoring, and connected care systems and accessories under the Spacelabs name for use in critical care, emergency, and perioperative areas within hospitals, physicians' offices, medical clinics, and ambulatory surgery centers. The Optoelectronics and Manufacturing segment provides optoelectronic devices under the OSI Optoelectronics, OSI LaserDiode, OSI Laserscan, and Advanced Photonix names for the aerospace and defense, avionics, medical imaging and diagnostics, biochemistry analysis, pharmaceutical, nanotechnology, telecommunications, construction, and homeland security markets. It also offers electronics manufacturing services to original equipment manufacturers and end users for medical, automotive, defense, aerospace, industrial, and consumer applications under the OSI Electronics, APlus Products, Altaflex, and PFC Flexible Circuits names; LCD displays for medical, industrial, and consumer electronics applications; and flex circuits for OEM customers. This segment offers laser-based remote sensing devices to detect and classify vehicles in toll and traffic management systems under the OSI Laserscan and Autosense names; and solid-state laser products for aerospace, defense, telecommunication, and medical applications under the OSI LaserDiode name. The company was incorporated in 1987 and is headquartered in Hawthorne, California.

About Power Integrations

Power Integrations, Inc. designs, develops, manufactures, and markets analog and mixed-signal integrated circuits (ICs), and other electronic components and circuitry used in high-voltage power conversion worldwide. The company provides a range of alternating current to direct current power conversion products that address power supply ranging from less than one watt of output to approximately 500 watts of output for mobile-device chargers, consumer appliances, utility meters, LCD monitors, main and standby power supplies for desktop computers and TVs, LED lighting, and various other consumer and industrial applications, as well as power conversion in high-power applications comprising industrial motors, solar and wind-power systems, electric vehicles, and high-voltage DC transmission systems. It also offers high-voltage diodes; InnoSwitch IC for electric vehicles; high-voltage gate-driver products used to operate high-voltage switches, such as insulated-gate bipolar transistors and silicon-carbide MOSFETs under the SCALE and SCALE-2 product-family names; and SCALE-iDriver for use in powertrain and charging applications for electric vehicles. In addition, the company provides motor-driver ICs for use in refrigerator compressors, ceiling fans, and air purifiers, as well as pumps, fans, and blowers used in consumer appliances, such as dishwashers and laundry machines. It serves communications, computer, consumer, and industrial markets. The company sells its products to original equipment manufacturers and merchant power supply manufacturers through direct sales staff, as well as a network of independent sales representatives and distributors. Power Integrations, Inc. was incorporated in 1988 and is headquartered in San Jose, California.