Head-To-Head Review: Sono-Tek (NASDAQ:SOTK) vs. ARM (NASDAQ:ARM)

Sono-Tek (NASDAQ:SOTK) and ARM (NASDAQ:ARM) are both computer and technology companies, but which is the superior investment? We will compare the two businesses based on the strength of their profitability, dividends, institutional ownership, valuation, risk, analyst recommendations and earnings.

Insider & Institutional Ownership

47.9% of Sono-Tek shares are held by institutional investors. Comparatively, 7.5% of ARM shares are held by institutional investors. 5.5% of Sono-Tek shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company will outperform the market over the long term.

Profitability

This table compares Sono-Tek and ARM’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Sono-Tek	6.93%	8.10%	6.07%
ARM	16.96%	15.56%	11.72%

Analyst Ratings

This is a breakdown of current recommendations and price targets for Sono-Tek and ARM, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Sono-Tek	0	2	0	0	2.00
ARM	1	6	18	1	2.73

Sono-Tek presently has a consensus target price of $7.50, indicating a potential upside of 82.93%. ARM has a consensus target price of $168.52, indicating a potential upside of 9.88%. Given Sono-Tek’s higher possible upside, analysts clearly believe Sono-Tek is more favorable than ARM.

Volatility and Risk

Sono-Tek has a beta of -0.25, suggesting that its share price is 125% less volatile than the S&P 500. Comparatively, ARM has a beta of 4.17, suggesting that its share price is 317% more volatile than the S&P 500.

Earnings & Valuation

This table compares Sono-Tek and ARM”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Sono-Tek	$20.61 million	3.13	$1.27 million	$0.09	45.56
ARM	$4.01 billion	40.44	$792.00 million	$0.66	232.38

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

Summary

ARM beats Sono-Tek on 12 of the 15 factors compared between the two stocks.

About Sono-Tek

Sono-Tek Corporation designs and manufactures ultrasonic coating systems for applying on parts and components for the microelectronics/electronics, alternative energy, medical, industrial, and research and development/other markets worldwide. The company also designs and manufactures custom-engineered ultrasonic coating systems; and provides nozzles and generators for manufacturers' equipment. Its products include integrated multi-axis coating systems, integrated coating systems, fluxing systems, OEM systems, and other related systems. In addition, the company provides surface coating solutions and application consulting services. It markets and distributes its products through direct sales personnel, select independent distributors, and sales representatives. The company was incorporated in 1975 and is based in Milton, New York.

About ARM

Arm Holdings Plc engages in the licensing, marketing, research, and development of microprocessors, systems IP, graphics processing units, physical IP and associated systems IP, software, and tools. It operates through the following geographical segments: United Kingdom, United States, and Other Countries. The company was founded on November 12, 1990 and is headquartered in Cambridge, the United Kingdom.