Critical Analysis: ClearOne (NASDAQ:CLRO) and Lumentum (NASDAQ:LITE)

Lumentum (NASDAQ:LITE) and ClearOne (NASDAQ:CLRO) are both computer and technology companies, but which is the superior stock? We will contrast the two companies based on the strength of their valuation, earnings, analyst recommendations, risk, dividends, institutional ownership and profitability.

Volatility and Risk

Lumentum has a beta of 1.42, indicating that its stock price is 42% more volatile than the S&P 500. Comparatively, ClearOne has a beta of 0.38, indicating that its stock price is 62% less volatile than the S&P 500.

Earnings & Valuation

This table compares Lumentum and ClearOne”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Lumentum	$1.65 billion	7.29	$25.90 million	$0.23	745.65
ClearOne	$11.39 million	0.78	-$8.98 million	($6.99)	-0.74

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

Analyst Ratings

This is a summary of current ratings and price targets for Lumentum and ClearOne, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Lumentum	0	4	12	2	2.89
ClearOne	0	0	0	0	0.00

Lumentum currently has a consensus price target of $128.00, suggesting a potential downside of 25.36%. Given Lumentum’s stronger consensus rating and higher probable upside, analysts plainly believe Lumentum is more favorable than ClearOne.

Institutional and Insider Ownership

94.1% of Lumentum shares are held by institutional investors. Comparatively, 9.6% of ClearOne shares are held by institutional investors. 0.2% of Lumentum shares are held by company insiders. Comparatively, 0.6% of ClearOne shares are held by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.

Profitability

This table compares Lumentum and ClearOne’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Lumentum	1.57%	-3.02%	-0.71%
ClearOne	-120.46%	-57.86%	-44.28%

Summary

Lumentum beats ClearOne on 14 of the 15 factors compared between the two stocks.

About Lumentum

Lumentum Holdings Inc. manufactures and sells optical and photonic products in the Americas, the Asia-Pacific, Europe, the Middle East, and Africa. The company operates through two segments: Optical Communications (OpComms) and Commercial Lasers (Lasers). The OpComms segment offers components, modules, and subsystems that enable the transmission and transport of video, audio, and data over high-capacity fiber optic cables. It offers tunable transponders, transceivers, and transmitter modules; tunable lasers, receivers, and modulators; transport products, such as reconfigurable optical add/drop multiplexers, amplifiers, and optical channel monitors, as well as components, including 980nm, multi-mode, and Raman pumps; and switches, attenuators, photodetectors, gain flattening filters, isolators, wavelength-division multiplexing filters, arrayed waveguide gratings, multiplex/de-multiplexers, and integrated passive modules. This segment also provides Super Transport Blade, which integrates optical transport functions into a single-slot blade; vertical-cavity surface-emitting lasers; directly modulated and electro-absorption modulated lasers; and laser illumination sources for 3D sensing systems. It serves customers in telecommunications, data communications, and consumer and industrial markets. The Commercial Lasers segment offers diode-pumped solid-state, fiber, diode, direct-diode, and gas lasers, such as argon-ion and helium-neon lasers for use in original equipment manufacturer applications. It serves customers in markets and applications, such as sheet metal processing, general manufacturing, biotechnology, solar cell processing, graphics and imaging, remote sensing, and precision machining. Lumentum Holdings Inc. was incorporated in 2015 and is headquartered in San Jose, California.

About ClearOne

ClearOne, Inc., together with its subsidiaries, designs, develops, and sells conferencing, collaboration, and network streaming solutions for voice and visual communications in the United States and internationally. The company offers a range of audio conferencing products, including professional audio conferencing and sound-reinforcement products for use in enterprise, healthcare, education and distance learning, government, legal, and finance organizations; mid-tier premium conferencing products for smaller rooms, and small and medium businesses, which interface with video and Web conferencing systems; USB-based personal and group speakerphones that could be used with PCs, laptops, tablets, smartphones, and other portable devices; and traditional tabletop conferencing phones used in conference rooms and offices. It provides professional microphones consisting of beamforming microphones, ceiling microphones, and wireless microphones. In addition, the company offers video products, such as video conferencing and collaboration solutions; professional-grade cameras; and AV networking, which deliver the IP A/V experience by streaming time sensitive high definition audio and video, and control over TCP/IP networks. It sells its commercial products to a network of independent professional audiovisual, information technology, and telecommunications distributors, as well as systems integrators, dealers, value-added resellers, and end-users. ClearOne, Inc. was incorporated in 1983 and is headquartered in Salt Lake City, Utah.