Financial Review: Precision Optics (NASDAQ:POCI) & Pacific Biosciences of California (NASDAQ:PACB)

Precision Optics (NASDAQ:POCI) and Pacific Biosciences of California (NASDAQ:PACB) are both small-cap medical companies, but which is the superior stock? We will contrast the two businesses based on the strength of their earnings, profitability, analyst recommendations, valuation, dividends, risk and institutional ownership.

Analyst Recommendations

This is a summary of current ratings for Precision Optics and Pacific Biosciences of California, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Precision Optics	0	0	0	0	0.00
Pacific Biosciences of California	0	5	4	0	2.44

Pacific Biosciences of California has a consensus target price of $2.06, suggesting a potential upside of 54.97%. Given Pacific Biosciences of California’s stronger consensus rating and higher probable upside, analysts clearly believe Pacific Biosciences of California is more favorable than Precision Optics.

Insider and Institutional Ownership

13.7% of Precision Optics shares are held by institutional investors. 13.0% of Precision Optics shares are held by company insiders. Comparatively, 2.5% of Pacific Biosciences of California shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock will outperform the market over the long term.

Risk and Volatility

Precision Optics has a beta of 0.3, meaning that its share price is 70% less volatile than the S&P 500. Comparatively, Pacific Biosciences of California has a beta of 2.17, meaning that its share price is 117% more volatile than the S&P 500.

Profitability

This table compares Precision Optics and Pacific Biosciences of California’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Precision Optics	-32.84%	-54.03%	-32.48%
Pacific Biosciences of California	-430.93%	-52.07%	-15.82%

Earnings & Valuation

This table compares Precision Optics and Pacific Biosciences of California”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Precision Optics	$19.10 million	1.89	-$2.95 million	($0.89)	-5.28
Pacific Biosciences of California	$154.01 million	2.59	-$309.85 million	($2.79)	-0.48

Precision Optics has higher earnings, but lower revenue than Pacific Biosciences of California. Precision Optics is trading at a lower price-to-earnings ratio than Pacific Biosciences of California, indicating that it is currently the more affordable of the two stocks.

Summary

Pacific Biosciences of California beats Precision Optics on 9 of the 14 factors compared between the two stocks.

About Precision Optics

Precision Optics Corporation, Inc. designs, develops, manufactures, and sells specialized optical and illumination systems and related components primarily in the United States and the European Economic Area. It offers medical instrumentation products, including endoscopes and endocouplers, as well as other custom imaging and illumination products, such as Microprecision lenses and micro medical cameras, and 3D endoscopes for use in minimally invasive surgical procedures by hospitals and physicians. The company also provides components and assemblies for industrial and military use. It markets its products to medical device companies. The company was incorporated in 1982 and is based in Gardner, Massachusetts.

About Pacific Biosciences of California

Pacific Biosciences of California, Inc. designs, develops, and manufactures sequencing solution to resolve genetically complex problems. The company provides sequencing systems; consumable products, including single molecule real-time (SMRT) technology; long-red sequencing; and various reagent kits designed for specific workflow, such as preparation kit to convert DNA into SMRTbell double-stranded DNA library formats, including molecular biology reagents, such as ligase, buffers, and exonucleases. It also offers binding kits, such as modified DNA polymerase used to bind SMRTbell libraries to the polymerase in preparation for sequencing; and sequencing kits comprise reagents required for on-instrument, real-time sequencing, including the phospholinked nucleotides. In addition, it provides revio system + sequel systems which conduct, monitor, and analyze single-molecule biochemical reactions in real time; SBB short-read sequencing; onso instrument conducts, monitors, and analyzes SBB biochemical reactions; and SBB consumable, including flow cells, clustering, and sequencing reagent kits. The company serves academic and governmental research institutions; commercial testing and service laboratories; genome centers; public health labs, hospitals and clinical research institutes, and contract research organizations; pharmaceutical companies; and agricultural companies. It markets its products through a sales force and distribution partners in Asia, Australia, Europe, the Middle East, Africa, and Latin America. It has a development and commercialization agreement with Invitae Corporation; and a collaboration with Radboud University Medical to explore genetic causes of rare and genetic diseases. The company was formerly known as Nanofluidics, Inc. and changed its name to Pacific Biosciences of California, Inc. in 2005. Pacific Biosciences of California, Inc. was incorporated in 2000 and is headquartered in Menlo Park, California.