Critical Review: TranSwitch (OTCMKTS:TXCCQ) versus nLight (NASDAQ:LASR)

TranSwitch (OTCMKTS:TXCCQ) and nLight (NASDAQ:LASR) are both computer and technology companies, but which is the superior investment? We will contrast the two companies based on the strength of their profitability, analyst recommendations, earnings, institutional ownership, dividends, valuation and risk.

Profitability

This table compares TranSwitch and nLight’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
TranSwitch	N/A	N/A	N/A
nLight	-19.13%	-17.11%	-12.81%

Valuation & Earnings

This table compares TranSwitch and nLight”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
TranSwitch	N/A	N/A	N/A	N/A	N/A
nLight	$198.55 million	13.37	-$60.79 million	($0.88)	-59.41

TranSwitch has higher earnings, but lower revenue than nLight.

Analyst Ratings

This is a summary of recent ratings and price targets for TranSwitch and nLight, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
TranSwitch	0	0	0	0	0.00
nLight	1	1	7	1	2.80

nLight has a consensus target price of $40.00, suggesting a potential downside of 23.49%. Given TranSwitch’s higher possible upside, equities research analysts plainly believe TranSwitch is more favorable than nLight.

Volatility and Risk

TranSwitch has a beta of 19.71, suggesting that its share price is 1,871% more volatile than the S&P 500. Comparatively, nLight has a beta of 2.33, suggesting that its share price is 133% more volatile than the S&P 500.

Institutional and Insider Ownership

83.9% of nLight shares are owned by institutional investors. 6.3% of TranSwitch shares are owned by insiders. Comparatively, 4.7% of nLight shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Summary

TranSwitch beats nLight on 6 of the 11 factors compared between the two stocks.

About TranSwitch

TranSwitch Corporation, together with its subsidiaries, designs, develops, and supplies integrated circuit and intellectual property solutions that provide functionality for voice, data, and video communications equipment for the customer premises and network infrastructure markets. The company provides integrated multi-core network processor system-on-a-chip (SoC) solutions for fixed, 3G and 4G mobile, VoIP, and multimedia applications. It offers converged network infrastructure products, including infrastructure VoIP processors for wire-line and wireless carrier equipment; access VoIP processors; and EoS/EoPDH mappers and framers for carriers to transport data traffic over SONET, SDH, and PDH networks. The company also offers broadband customer premises equipment, such as connectivity solutions comprising HDMI, DisplayPort, MHL, HDP, Ethernet IP cores, and MHDP transceivers for consumer electronics, home network equipment, and industrial and automotive applications; and multi-service SoCs for customer premises equipment that support telephone voice, fax, and routing functionality over broadband access networks. TranSwitch Corporation sells its products to public network system original equipment manufacturers (OEMs), WAN and LAN equipment OEMs, Internet-oriented OEMs, and communications test and performance measurement equipment OEMs; and government, universities, and private laboratories. The company offers its products directly in North America, Taiwan, China, Japan, Korea, and Europe, as well as through a network of distributors in North America, Asia, and Europe. TranSwitch Corporation was founded in 1988 and is headquartered in Shelton, Connecticut. On November 21, 2013, TranSwitch Corporation filed a voluntary petition for liquidation under Chapter 7 in the U.S. Bankruptcy Court for the District of Connecticut.

About nLight

nLIGHT, Inc. designs, develops, manufactures, and sells semiconductor and fiber lasers for industrial, microfabrication, and aerospace and defense applications. The company operates in two segments, Laser Products and Advanced Development. It offers semiconductor lasers with various ranges of power levels, wavelengths, and output fiber sizes; and programmable and serviceable fiber lasers for use in industrial and aerospace and defense applications. The company also provides laser sensors, including light detection and ranging technologies for intelligence, surveillance, and reconnaissance applications; and fiber amplifiers, beam combination, and control systems for use in high-energy laser systems in directed energy applications. It sells its products through direct sales force in the United States, China, South Korea, and European countries, as well as through independent sales representatives and distributors in Asia, Australia, Europe, the Middle East, and South America. The company was formerly known as nLight Photonics Corporation and changed its name to nLIGHT, Inc. in January 2016. nLIGHT, Inc. was incorporated in 2000 and is headquartered in Camas, Washington.