Critical Analysis: Key Tronic (NASDAQ:KTCC) and Mistras Group (NYSE:MG)

Key Tronic (NASDAQ:KTCC) and Mistras Group (NYSE:MG) are both small-cap computer and technology companies, but which is the superior stock? We will contrast the two companies based on the strength of their analyst recommendations, profitability, earnings, institutional ownership, risk, dividends and valuation.

Profitability

This table compares Key Tronic and Mistras Group’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Key Tronic	-2.69%	-8.43%	-3.06%
Mistras Group	2.55%	13.10%	4.97%

Insider & Institutional Ownership

40.7% of Key Tronic shares are held by institutional investors. Comparatively, 74.9% of Mistras Group shares are held by institutional investors. 7.9% of Key Tronic shares are held by insiders. Comparatively, 4.8% of Mistras Group shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Risk and Volatility

Key Tronic has a beta of 1.1, meaning that its share price is 10% more volatile than the S&P 500. Comparatively, Mistras Group has a beta of 0.91, meaning that its share price is 9% less volatile than the S&P 500.

Earnings and Valuation

This table compares Key Tronic and Mistras Group”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Key Tronic	$467.87 million	0.06	-$8.32 million	($1.09)	-2.55
Mistras Group	$729.64 million	0.56	$18.96 million	$0.58	22.24

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

Analyst Ratings

This is a summary of current ratings for Key Tronic and Mistras Group, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Key Tronic	1	0	0	0	1.00
Mistras Group	0	1	0	0	2.00

Mistras Group has a consensus price target of $16.00, indicating a potential upside of 24.01%. Given Mistras Group’s stronger consensus rating and higher possible upside, analysts plainly believe Mistras Group is more favorable than Key Tronic.

Summary

Mistras Group beats Key Tronic on 11 of the 13 factors compared between the two stocks.

About Key Tronic

Key Tronic Corporation provides contract manufacturing services to original equipment manufacturers in the United States and internationally. The company offers integrated electronic and mechanical engineering, assembly, sourcing and procurement, logistics, and new product testing services. Its services include product design; surface mount technologies and pin through hole capability for printed circuit board assembly; tool making; precision plastic molding; sheet metal fabrication and painting; liquid injection molding; complex assembly; prototype design; and full product assembly services. The company manufactures and sells keyboards and other input devices. It markets its products and services primarily through field sales people and distributors. Key Tronic Corporation was incorporated in 1969 and is headquartered in Spokane Valley, Washington.

About Mistras Group

Mistras Group, Inc. provides technology-enabled asset protection solutions in the United States, other Americas, Europe, and the Asia-Pacific. The company offers non-destructive testing services; inline inspection for pipelines; and plant condition management software. It also provides maintenance and light mechanical services, such as corrosion removal, mitigation and prevention, insulation installation and removal, electrical, heat tracing, industrial cleaning, pipefitting, and welding; engineering consulting services primarily for process equipment, technologies, and facilities; and utilizes scaffolding and rope access to access at-height and confined assets. In addition, the company offers certified divers for subsea inspection and maintenance; unmanned aerial, land-based, and subsea systems for inspection applications; online condition-monitoring solutions; quality assurance and quality control solutions for new and existing metal and alloy components, materials, and composites. Further, it builds monitoring systems, as well as provides inspection, maintenance, monitoring and data services; and Web-based solutions. Additionally, the company designs, manufactures, and sells acoustic emission sensors, instruments, and turnkey systems for monitoring and testing materials, pressure components, processes, and structures; and ultrasonic testing equipment. It serves oil and gas, aerospace and defense, fossil and nuclear power, power generation and transmission, civil infrastructure, manufacturing, industrial, public infrastructure, petrochemical, transportation, and other process industries, as well as infrastructure, research, and engineering industries. Mistras Group, Inc. was founded in 1978 and is headquartered in Princeton Junction, New Jersey.