Sparton Corporation (SPA) vs. Sequans Communications (SQNS) Critical Analysis

Sparton Corporation (NYSE: SPA) and Sequans Communications (NYSE:SQNS) are both small-cap computer and technology companies, but which is the superior investment? We will compare the two businesses based on the strength of their earnings, analyst recommendations, dividends, institutional ownership, valuation, risk and profitability.

Analyst Recommendations

This is a summary of recent recommendations and price targets for Sparton Corporation and Sequans Communications, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Sparton Corporation 0 1 0 0 2.00
Sequans Communications 0 0 6 0 3.00

Sparton Corporation currently has a consensus price target of $20.00, indicating a potential downside of 13.57%. Sequans Communications has a consensus price target of $5.03, indicating a potential upside of 48.04%. Given Sequans Communications’ stronger consensus rating and higher probable upside, analysts clearly believe Sequans Communications is more favorable than Sparton Corporation.

Volatility and Risk

Sparton Corporation has a beta of 1.35, suggesting that its share price is 35% more volatile than the S&P 500. Comparatively, Sequans Communications has a beta of 2.56, suggesting that its share price is 156% more volatile than the S&P 500.

Institutional and Insider Ownership

67.9% of Sparton Corporation shares are held by institutional investors. Comparatively, 31.9% of Sequans Communications shares are held by institutional investors. 5.0% of Sparton Corporation shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.

Profitability

This table compares Sparton Corporation and Sequans Communications’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Sparton Corporation 0.33% 11.18% 3.95%
Sequans Communications -42.44% -212.46% -32.62%

Earnings & Valuation

This table compares Sparton Corporation and Sequans Communications’ gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Sparton Corporation $397.56 million 0.57 $22.01 million $0.13 178.00
Sequans Communications $52.06 million 5.21 -$11.89 million ($0.30) -11.33

Sparton Corporation has higher revenue and earnings than Sequans Communications. Sequans Communications is trading at a lower price-to-earnings ratio than Sparton Corporation, indicating that it is currently the more affordable of the two stocks.

Summary

Sparton Corporation beats Sequans Communications on 8 of the 13 factors compared between the two stocks.

About Sparton Corporation

Sparton Corporation is a provider of design, development and manufacturing services for electromechanical devices, as well as engineered products complementary to the same electromechanical value stream. The Company operates through two segments: Manufacturing & Design Services (MDS) and Engineered Components & Products (ECP). The Company serves the medical and biotechnology, military and aerospace, and industrial and commercial markets. Its products and services include offerings for original equipment manufacturers (OEM) and emerging technology (ET) customers, which utilize microprocessor-based systems, such as transducers, printed circuit boards and assemblies, and sensors, as well as development and design engineering services. It develops and manufactures sonobuoys, which are anti-submarine warfare (ASW) devices. The Company also manufactures rugged flat panel display systems for military panel personal computer workstations, air traffic control and industrial applications.

About Sequans Communications

Sequans Communications S.A. is a fabless designer, developer and supplier of fourth Generation long term evolution (4G LTE) semiconductor solutions for wireless broadband applications, with a specific focus on the single-mode device market. Its semiconductor solutions integrate baseband processor and radio frequency (RF) transceiver integrated circuits (ICs) along with its signal processing techniques, algorithms and software stacks. In the broadband data device market, its solutions serve as the wireless communications platform in devices, such as smartphones; Universal Serial Bus (USB) dongles; portable routers; embedded wireless modems for laptops, tablets, and other consumer multimedia devices; and customer-premises equipment, such as fixed wireless access modems, routers and residential gateways. The Company’s products include SQN3330, SQN3223, SQN3221, SQN3241, VZ120Q, VZ22Q, VZ22M, US60L, SQN3220, SQN3240, SQN3120, SQN5120, SQN3140, VZ20Q, VZ20M, SQN1210 and SQN1220.

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