SCI Engineered Materials (OTCMKTS:SCIA) versus Allegro MicroSystems (NASDAQ:ALGM) Critical Review

Allegro MicroSystems (NASDAQ:ALGM) and SCI Engineered Materials (OTCMKTS:SCIA) are both computer and technology companies, but which is the superior business? We will contrast the two businesses based on the strength of their risk, institutional ownership, valuation, profitability, earnings, analyst recommendations and dividends.

Analyst Recommendations

This is a summary of current ratings and price targets for Allegro MicroSystems and SCI Engineered Materials, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Allegro MicroSystems	1	1	10	0	2.75
SCI Engineered Materials	0	0	0	0	0.00

Allegro MicroSystems presently has a consensus target price of $45.00, suggesting a potential upside of 9.01%. Given Allegro MicroSystems’ stronger consensus rating and higher probable upside, analysts clearly believe Allegro MicroSystems is more favorable than SCI Engineered Materials.

Institutional and Insider Ownership

56.5% of Allegro MicroSystems shares are held by institutional investors. Comparatively, 27.6% of SCI Engineered Materials shares are held by institutional investors. 0.4% of Allegro MicroSystems shares are held by company insiders. Comparatively, 19.3% of SCI Engineered Materials shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock is poised for long-term growth.

Risk & Volatility

Allegro MicroSystems has a beta of 1.7, indicating that its stock price is 70% more volatile than the S&P 500. Comparatively, SCI Engineered Materials has a beta of 0.96, indicating that its stock price is 4% less volatile than the S&P 500.

Profitability

This table compares Allegro MicroSystems and SCI Engineered Materials’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Allegro MicroSystems	-1.57%	4.35%	2.92%
SCI Engineered Materials	8.91%	12.67%	9.93%

Earnings & Valuation

This table compares Allegro MicroSystems and SCI Engineered Materials”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Allegro MicroSystems	$725.01 million	10.55	-$73.01 million	($0.08)	-516.00
SCI Engineered Materials	$19.61 million	1.11	$1.75 million	$0.38	12.89

SCI Engineered Materials has lower revenue, but higher earnings than Allegro MicroSystems. Allegro MicroSystems is trading at a lower price-to-earnings ratio than SCI Engineered Materials, indicating that it is currently the more affordable of the two stocks.

About Allegro MicroSystems

Allegro MicroSystems, Inc., together with its subsidiaries, designs, develops, manufactures, and markets sensor integrated circuits (ICs) and application-specific analog power ICs for motion control and energy-efficient systems. Its products include magnetic sensor ICs, such as position, speed, and current sensor ICs; and power ICs comprising motor driver ICs, regulator and LED driver ICs, and isolated gate drivers. The company sells its products to original equipment manufacturers and distributors primarily in the automotive and industrial markets through its direct sales force, third party distributors, independent sales representatives, and consignment. It operates in the United States, rest of the Americas, Europe, Japan, Greater China, South Korea, and other Asian markets. The company was founded in 1990 and is headquartered in Manchester, New Hampshire. Allegro MicroSystems, Inc. is a subsidiary of Sanken Electric Co., Ltd.

About SCI Engineered Materials

SCI Engineered Materials, Inc. engages in the manufacture and supply of materials for physical vapor deposition thin film applications in the United States. It offers ceramic targets, metal sputtering targets, and backing plates for use in semiconductors, thin film solar, flat panel displays, defense, aerospace, and photonics industries. The company’s materials are used to produce nano layers of metals and oxides for advanced material systems; and in applying decorative coatings for end uses, such as sink faucets to produce various electronic, photonic, and semiconductor products. It serves domestic and multi-national corporations, universities, and research institutions. The company was formerly known as Superconductive Components, Inc. and changed its name to SCI Engineered Materials, Inc. in 2007. SCI Engineered Materials, Inc. was incorporated in 1987 and is headquartered in Columbus, Ohio.