Financial Analysis: TearLab (TEAR) versus LightPath Technologies (LPTH)

LightPath Technologies (NASDAQ: LPTH) and TearLab (OTCMKTS:TEAR) are both small-cap computer and technology companies, but which is the better stock? We will compare the two businesses based on the strength of their analyst recommendations, valuation, earnings, dividends, institutional ownership, risk and profitability.

Analyst Recommendations

This is a breakdown of recent ratings for LightPath Technologies and TearLab, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
LightPath Technologies 0 0 2 0 3.00
TearLab 0 0 4 0 3.00

LightPath Technologies presently has a consensus target price of $2.80, indicating a potential upside of 21.74%. TearLab has a consensus target price of $5.75, indicating a potential upside of 1,150.00%. Given TearLab’s higher possible upside, analysts clearly believe TearLab is more favorable than LightPath Technologies.

Risk and Volatility

LightPath Technologies has a beta of -0.66, indicating that its stock price is 166% less volatile than the S&P 500. Comparatively, TearLab has a beta of 2.7, indicating that its stock price is 170% more volatile than the S&P 500.

Insider & Institutional Ownership

32.6% of LightPath Technologies shares are owned by institutional investors. Comparatively, 12.2% of TearLab shares are owned by institutional investors. 12.7% of LightPath Technologies shares are owned by insiders. Comparatively, 12.0% of TearLab shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company will outperform the market over the long term.

Profitability

This table compares LightPath Technologies and TearLab’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
LightPath Technologies 25.13% 31.44% 19.09%
TearLab -60.22% N/A -75.54%

Valuation and Earnings

This table compares LightPath Technologies and TearLab’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
LightPath Technologies $28.37 million 1.99 $7.70 million $0.31 7.42
TearLab $28.01 million 0.09 -$19.92 million ($3.10) -0.15

LightPath Technologies has higher revenue and earnings than TearLab. TearLab is trading at a lower price-to-earnings ratio than LightPath Technologies, indicating that it is currently the more affordable of the two stocks.

Summary

LightPath Technologies beats TearLab on 9 of the 12 factors compared between the two stocks.

LightPath Technologies Company Profile

LightPath Technologies, Inc. is a manufacturer and integrator of families of precision molded aspheric optics, fiber-optic collimator, GRADIUM glass lenses and other optical materials used to produce products that manipulate light. The Company designs, develops, manufactures and distributes optical components and assemblies utilizing the optical processes and manufacturing technologies. The Company also performs research and development for optical solutions for the traditional optics markets and communications markets. The Company’s products are incorporated into a range of applications by its customers in various industries, including defense products, medical devices, laser aided industrial tools, automotive safety applications, barcode scanners, optical data storage, hybrid fiber coax datacom, telecommunications, machine vision and sensors.

TearLab Company Profile

TearLab Corporation is an in-vitro diagnostic company. The Company has commercialized a tear testing platform, the TearLab Osmolarity System, which enables eye care practitioners to test for sensitive and specific biomarkers using nanoliters of tear film at the point-of-care. The Company, through its subsidiary TearLab Research, Inc., develops technologies to enable eye care practitioners to test a range of biomarkers (chemistries, metabolites, genes and proteins) at the point-of-care. Its product, the TearLab Osmolarity System, enables the measurement of tear osmolarity in the doctor’s office. The TearLab Osmolarity System consists of approximately three components: the TearLab disposable, the TearLab Pen, and the TearLab Reader. The TearLab disposable is a single-use microfluidic microchip. The TearLab Pen is a hand-held device that interfaces with the TearLab disposable. The TearLab Reader is a small desktop unit that allows for the docking of the TearLab Pen.

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