Contrasting Luna Innovations (LUNA) and Fulgent Genetic (FLGT)

Luna Innovations (NASDAQ: LUNA) and Fulgent Genetic (NASDAQ:FLGT) are both small-cap business services companies, but which is the superior stock? We will contrast the two companies based on the strength of their valuation, dividends, earnings, analyst recommendations, profitability, institutional ownership and risk.

Profitability

This table compares Luna Innovations and Fulgent Genetic’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Luna Innovations -3.00% -5.00% -3.24%
Fulgent Genetic -0.42% -0.02% -0.02%

Institutional & Insider Ownership

10.0% of Luna Innovations shares are held by institutional investors. Comparatively, 16.8% of Fulgent Genetic shares are held by institutional investors. 13.0% of Luna Innovations shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock will outperform the market over the long term.

Analyst Ratings

This is a summary of recent ratings and price targets for Luna Innovations and Fulgent Genetic, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Luna Innovations 0 0 1 0 3.00
Fulgent Genetic 0 0 3 0 3.00

Luna Innovations presently has a consensus target price of $3.00, suggesting a potential upside of 100.00%. Fulgent Genetic has a consensus target price of $10.67, suggesting a potential upside of 97.17%. Given Luna Innovations’ higher probable upside, research analysts clearly believe Luna Innovations is more favorable than Fulgent Genetic.

Earnings & Valuation

This table compares Luna Innovations and Fulgent Genetic’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Luna Innovations $57.27 million 0.74 $2.29 million ($0.07) -21.43
Fulgent Genetic $20.81 million 4.61 $2.17 million ($0.38) -14.24

Luna Innovations has higher revenue and earnings than Fulgent Genetic. Luna Innovations is trading at a lower price-to-earnings ratio than Fulgent Genetic, indicating that it is currently the more affordable of the two stocks.

Summary

Fulgent Genetic beats Luna Innovations on 6 of the 11 factors compared between the two stocks.

About Luna Innovations

Luna Innovations Incorporated develops, manufactures and markets fiber optic sensing and test, and measurement products. The Company is focused on bringing technology solutions to measure and monitor processes in the aerospace, automotive, energy, composite, telecommunications and defense industries. The Company operates in two business segments: Products and Licensing, and Technology Development. The Products and Licensing segment develops, manufactures and markets its suite of products, including high-speed optical receiver (HSOR), custom optoelectronic subsystems (Optoelectronics), and Terahertz (THz) products, and fiber optic sensing, as well as test and measurement products. The Technology Development segment performs applied research principally in the areas of sensing and instrumentation, advanced materials and health sciences. The Company’s HSOR transmission products are deployed in the Internet communications equipment infrastructure for high-speed bandwidth.

About Fulgent Genetic

Fulgent Genetics, Inc. is a technology company. The Company offers genetic testing to provide physicians with clinically actionable diagnostic information to improve quality of patient care. The Company has developed a technology platform that integrates data comparison and suppression algorithms, adaptive learning software, advanced genetic diagnostics tools and integrated laboratory processes. As of December 31, 2015, the Company’s test menu includes approximately 18,000 single-gene tests and over 200 pre-established, multi-gene, disease-specific panels that collectively test for approximately 7,500 genetic conditions, including various cancers, cardiovascular diseases and neurological disorders. The Company’s gene probes are specifically engineered to generate genetic data that is optimized for its software, which enables to rapidly incorporate new genes into its test menu, develop new panels of disease-specific tests and customize tests for its customers.

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