Financial Analysis: China Techfaith Wireless Communication Technology (OTCMKTS:CNTFY) and Lantronix (NASDAQ:LTRX)

Lantronix (NASDAQ:LTRX) and China Techfaith Wireless Communication Technology (OTCMKTS:CNTFY) are both small-cap technology companies, but which is the superior business? We will compare the two companies based on the strength of their valuation, dividends, analyst recommendations, risk, profitability, institutional ownership and earnings.

Volatility and Risk

Lantronix has a beta of 1.7, suggesting that its share price is 70% more volatile than the S&P 500. Comparatively, China Techfaith Wireless Communication Technology has a beta of 1.68, suggesting that its share price is 68% more volatile than the S&P 500.

Earnings and Valuation

This table compares Lantronix and China Techfaith Wireless Communication Technology”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Lantronix	$122.92 million	2.17	-$11.37 million	($0.17)	-35.71
China Techfaith Wireless Communication Technology	N/A	N/A	N/A	N/A	N/A

China Techfaith Wireless Communication Technology has lower revenue, but higher earnings than Lantronix.

Analyst Ratings

This is a breakdown of current recommendations and price targets for Lantronix and China Techfaith Wireless Communication Technology, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Lantronix	1	0	6	0	2.71
China Techfaith Wireless Communication Technology	0	0	0	0	0.00

Lantronix currently has a consensus target price of $10.40, suggesting a potential upside of 71.33%. Given Lantronix’s stronger consensus rating and higher probable upside, research analysts clearly believe Lantronix is more favorable than China Techfaith Wireless Communication Technology.

Profitability

This table compares Lantronix and China Techfaith Wireless Communication Technology’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Lantronix	-5.52%	-6.79%	-4.17%
China Techfaith Wireless Communication Technology	N/A	N/A	N/A

Insider and Institutional Ownership

39.4% of Lantronix shares are owned by institutional investors. 2.4% of Lantronix shares are owned by insiders. Comparatively, 33.3% of China Techfaith Wireless Communication Technology shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.

Summary

Lantronix beats China Techfaith Wireless Communication Technology on 6 of the 10 factors compared between the two stocks.

About Lantronix

Lantronix, Inc. provides solutions for video surveillance, infotainment systems, and intelligent substations infrastructure in the Americas, Europe, the Middle East, Africa, and the Asia Pacific Japan. The company's IoT products include IoT System Solutions, which provide wired and wireless connections that enhance the value and utility of modern electronic systems and equipment through secure network connectivity, power for IoT end devices through Power over Ethernet, application hosting, protocol conversion, media conversion, secure access for distributed IoT deployments, and various other functions; Embedded IoT Modules, such as application processing delivering compute to meet customer needs for data transformation, computer vision, machine learning, augmented/virtual reality, audio/video aggregation and distribution, and custom applications; and Software and Engineering Services offers SaaS platform that enables customers to deploy, monitor, manage, and automate across their global deployments through a single platform login. It also offers telematics devices, which provides power efficient products designed to support communications across interfaces and industrial protocols for vehicle, fleet, and asset tracking and management; network switches, media converters, power over ethernet, NICS and optical SFPs, system on modules, and development kits; and services for mechanical, hardware, and software engineering for camera, audio, and artificial intelligence/machine learning development. In addition, the company provides console management, power management, and IP connected keyboard-video-mouse products that offers remote access to IT and networking infrastructure deployed in test labs, data centers, branch offices, remote sites, and server rooms; and hardware engineering, software engineering, and mechanical engineering, rapid prototyping and quality assurance engineering services. Lantronix, Inc. was incorporated in 1989 and is based in Irvine, California.

About China Techfaith Wireless Communication Technology

China TechFaith Wireless Communication Technology Limited engages in the original design and development of specialized mobile handsets for consumers and enterprises in the People's Republic of China and internationally. It operates through Mobile Phone Business and Real Estate segments. The company offers handset design services through outsourcing of EMS providers who engage in assembly and manufacturing operations; and offer testing services of the assembled printed circuit boards, systems, and subsystems for Chinese mobile handset brand owners and international mobile handset brand owners. It also provides feature phones, smart phones, ruggedized phones, wireless modules, smart pads, and wireless software and applications, as well as other electronic components, such as industrial wireless devices. In addition, the company sells mobile handset products under the Tecface, 17FOX, and MOBIFOX brands. Further, it owns, develops, operates, and manages commercial real estate properties. The company was founded in 2002 and is headquartered in Beijing, the People's Republic of China.