Critical Review: RADA Electronic Ind. (RADA) vs. Richardson Electronics (RELL)

RADA Electronic Ind. (NASDAQ:RADA) and Richardson Electronics (NASDAQ:RELL) are both small-cap aerospace companies, but which is the superior investment? We will compare the two businesses based on the strength of their earnings, risk, institutional ownership, dividends, profitability, valuation and analyst recommendations.

Profitability

This table compares RADA Electronic Ind. and Richardson Electronics’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
RADA Electronic Ind. 2.80% 1.55% 1.27%
Richardson Electronics 1.39% 2.15% 1.78%

Volatility and Risk

RADA Electronic Ind. has a beta of 0.35, indicating that its stock price is 65% less volatile than the S&P 500. Comparatively, Richardson Electronics has a beta of 0.44, indicating that its stock price is 56% less volatile than the S&P 500.

Institutional and Insider Ownership

3.8% of RADA Electronic Ind. shares are held by institutional investors. Comparatively, 43.6% of Richardson Electronics shares are held by institutional investors. 1.0% of RADA Electronic Ind. shares are held by insiders. Comparatively, 35.6% of Richardson Electronics shares are held 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.

Valuation and Earnings

This table compares RADA Electronic Ind. and Richardson Electronics’ gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
RADA Electronic Ind. $26.18 million 3.40 $2.23 million N/A N/A
Richardson Electronics $163.21 million 0.60 $3.82 million N/A N/A

Richardson Electronics has higher revenue and earnings than RADA Electronic Ind..

Analyst Ratings

This is a summary of recent recommendations for RADA Electronic Ind. and Richardson Electronics, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
RADA Electronic Ind. 0 0 1 0 3.00
Richardson Electronics 0 0 0 0 N/A

RADA Electronic Ind. presently has a consensus target price of $5.00, suggesting a potential upside of 85.19%. Given RADA Electronic Ind.’s higher probable upside, equities research analysts clearly believe RADA Electronic Ind. is more favorable than Richardson Electronics.

Dividends

Richardson Electronics pays an annual dividend of $0.24 per share and has a dividend yield of 3.2%. RADA Electronic Ind. does not pay a dividend.

Summary

Richardson Electronics beats RADA Electronic Ind. on 8 of the 13 factors compared between the two stocks.

RADA Electronic Ind. Company Profile

RADA Electronic Industries Ltd. develops, manufactures, markets, and sells defense electronics to various air forces and companies worldwide. The company offers military avionics systems, including flight data recorders for fighter aircraft; digital video/audio/data recorders with data transfer functions; high-rate data recorders for aircraft and airborne pods; video recorders and airborne data servers; high definition digital video/audio/data recording for fighter and trainer aircrafts; a range of head-up-displays color video cameras for fighter aircraft; and various ground debriefing solutions. It also provides avionics solutions comprising mission data recorders and debriefing solutions; weapon management systems; data interface and processing computers; HUD video cameras; and avionics for unmanned aircraft vehicles (UAVs). In addition, the company offers inertial navigation systems (INS); R-100F, a FOG based navigation-grade embedded GPS-INS for fighters and helicopters; R-200M, a MEMS-based multiple-sensor aided INS for UAVs and backup INS for manned aircraft; and modular avionics and MEMS-based INS for UAVs. Further, it provides ground-based radars for tactical applications, such as defense forces protection and border protection. The company has strategic relationships with Embraer S.A., Hindustan Aeronautics Ltd., Israel Aerospace Industries Ltd., Lockheed Martin Corporation, Rafael Advanced Defense Systems Ltd., and DRS and SAZE Technologies, as well as Boeing Defense, Space & Security. RADA Electronic Industries Ltd. was founded in 1970 and is headquartered in Netanya, Israel.

Richardson Electronics Company Profile

Richardson Electronics Ltd. engages in the provision of engineered solutions and distributes electronic components to the electron device marketplace. It operates through the following segments: Power and Microwave Technologies Group (PMT), Canvys, and Healthcare. The PMT segment provides solutions and adds value through design-in support, systems integration, prototype design and manufacturing, testing, logistics, and aftermarket technical service and repair-all through its existing global infrastructure. The Canvys segment offers customized display solutions serving the corporate enterprise, financial, healthcare, industrial, and medical original equipment manufacturers markets. The Healthcare segment manufactures, refurbishes, and distributes replacement parts for the healthcare market including hospitals, medical centers, asset management companies, independent service organizations, and multi-vendor service providers. The company was founded on May 31, 1947 and is headquartered in LaFox, IL.

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