Critical Review: Data I/O (NASDAQ:DAIO) and Orbit International (OTCMKTS:ORBT)

Data I/O (NASDAQ:DAIO) and Orbit International (OTCMKTS:ORBT) are both small-cap computer and technology companies, but which is the better business? We will compare the two companies based on the strength of their earnings, risk, institutional ownership, profitability, valuation, analyst recommendations and dividends.

Analyst Recommendations

This is a breakdown of recent ratings for Data I/O and Orbit International, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Data I/O	2	0	2	1	2.40
Orbit International	0	0	0	0	0.00

Data I/O currently has a consensus target price of $5.11, indicating a potential upside of 86.50%. Given Data I/O’s stronger consensus rating and higher probable upside, analysts clearly believe Data I/O is more favorable than Orbit International.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Data I/O	-23.19%	-31.01%	-21.80%
Orbit International	-22.38%	-34.69%	-22.21%

Insider and Institutional Ownership

37.0% of Data I/O shares are owned by institutional investors. 7.3% of Data I/O shares are owned by company insiders. Comparatively, 11.3% of Orbit International shares are owned 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.

Earnings & Valuation

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

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Data I/O	$21.50 million	1.20	-$5.24 million	($0.54)	-5.07
Orbit International	$22.45 million	0.72	-$5.03 million	($1.51)	-3.05

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

Volatility & Risk

Data I/O has a beta of 1.1, indicating that its share price is 10% more volatile than the S&P 500. Comparatively, Orbit International has a beta of 0.16, indicating that its share price is 84% less volatile than the S&P 500.

Summary

Data I/O beats Orbit International on 10 of the 15 factors compared between the two stocks.

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.

About Orbit International

Orbit International Corp. engages in the design, manufacture, and sale of electronic components and subsystems, and commercial and custom power units for prime contractors, government procurement agencies, and research and development laboratories worldwide. The company operates in two segments, Electronics Group and Power Group. The Electronics Group segment designs, manufactures, and sells customized electronic components and subsystems. This segment offers remote control units, intercommunication panels, displays, keyboards, keypads and pointing devices, operator control trays, and command display units, as well as provides LCD display modules, military simulation and training bezels, electronic control assemblies, and multi-function displays design and enhancement services. The Power Group segment designs and manufactures commercial power units, AC power, frequency converters, uninterruptible power supplies, armament systems, and commercial-off-the-shelf power solutions, as well as inverters. The company was formerly known as Orbit Instrument Corp. and changed its name to Orbit International Corp. in July 1991. Orbit International Corp. was founded in 1957 and is based in Hauppauge, New York.