Critical Review: Data I/O (NASDAQ:DAIO) and Fabrinet (NYSE:FN)

Fabrinet (NYSE:FN) and Data I/O (NASDAQ:DAIO) are both computer and technology companies, but which is the superior investment? We will compare the two companies based on the strength of their dividends, valuation, earnings, institutional ownership, analyst recommendations, risk and profitability.

Analyst Recommendations

This is a summary of recent recommendations for Fabrinet and Data I/O, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Fabrinet	0	2	6	1	2.89
Data I/O	2	0	2	1	2.40

Fabrinet currently has a consensus price target of $541.25, indicating a potential downside of 1.16%. Data I/O has a consensus price target of $5.11, indicating a potential upside of 108.57%. Given Data I/O’s higher possible upside, analysts plainly believe Data I/O is more favorable than Fabrinet.

Volatility and Risk

Fabrinet has a beta of 1.01, indicating that its share price is 1% more volatile than the S&P 500. Comparatively, Data I/O has a beta of 1.1, indicating that its share price is 10% more volatile than the S&P 500.

Earnings and Valuation

This table compares Fabrinet and Data I/O”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Fabrinet	$3.42 billion	5.74	$332.53 million	$10.44	52.45
Data I/O	$21.50 million	1.07	-$4.99 million	($0.54)	-4.54

Fabrinet has higher revenue and earnings than Data I/O. Data I/O is trading at a lower price-to-earnings ratio than Fabrinet, indicating that it is currently the more affordable of the two stocks.

Insider and Institutional Ownership

97.4% of Fabrinet shares are owned by institutional investors. Comparatively, 37.0% of Data I/O shares are owned by institutional investors. 0.2% of Fabrinet shares are owned by insiders. Comparatively, 7.3% of Data I/O shares are owned 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.

Profitability

This table compares Fabrinet and Data I/O’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Fabrinet	9.69%	18.69%	12.96%
Data I/O	-23.19%	-29.44%	-20.97%

Summary

Fabrinet beats Data I/O on 11 of the 14 factors compared between the two stocks.

About Fabrinet

Fabrinet provides optical packaging and precision optical, electro-mechanical, and electronic manufacturing services in North America, the Asia-Pacific, and Europe. The company offers a range of advanced optical and electro-mechanical capabilities in the manufacturing process, including process design and engineering, supply chain management, manufacturing, printed circuit board assembly, advanced packaging, integration, final assembly, and testing. Its products include switching products, including reconfigurable optical add-drop multiplexers, optical amplifiers, modulators, and other optical components and modules that enable network managers to route voice, video, and data communications traffic through fiber optic cables at various wavelengths, speeds, and over various distances. The company's products also comprise tunable lasers, transceivers, and transponders; and active optical cables, which provide high-speed interconnect capabilities for data centers and computing clusters, as well as Infiniband, Ethernet, fiber channel, and optical backplane connectivity. In addition, it provides solid state, diode-pumped, gas, and fiber lasers used in semiconductor processing, biotechnology and medical device, metrology, and material processing industries; and differential pressure, micro-gyro, fuel, and other sensors used in automobiles, as well as non-contact temperature measurement sensors for the medical industry. Further, the company designs and fabricates application-specific crystals, lenses, prisms, mirrors, laser components, and substrates; and other custom and standard borosilicate, clear fused quartz, and synthetic fused silica glass products. It serves original equipment manufacturers of optical communication components, modules and sub-systems, industrial lasers, automotive components, medical devices, and sensors. The company was incorporated in 1999 and is based in Grand Cayman, the Cayman Islands.

About Data I/O

Data I/O Corporation, together with its subsidiaries, engages in the design, manufacture, and sale of programming and security deployment systems and services for electronic device manufacturers in the United States, Europe, and internationally. Its programming system products are used to program integrated circuits (ICs) with the specific data for the ICs. The company offers PSV handlers off-line automated programming systems, such as PSV2800 automated programming system which focuses on high-volume manufacturing in a lower cost platform; PSV7000 automated programming system for security deployment upgrades; PSV5000 automated programming system that combines mid-range capacity and supports security deployment; and PSV3500 automated programming system which provides basic programming needs. It also provides SentriX security deployment system; and LumenX and non-automated FlashPAK III programming systems. In addition, the company offers hardware support, system installation and repair, and device programming services. It markets and sells its products to original equipment manufacturers in automotive and consumer electronics, internet of things, and industrial, as well as electronic manufacturing service contract manufacturers through direct sales, and indirect sales representatives and distributors. Data I/O Corporation was incorporated in 1969 and is headquartered in Redmond, Washington.