AudioCodes (NASDAQ:AUDC) vs. Knowles (NYSE:KN) Critical Analysis

Knowles (NYSE:KN) and AudioCodes (NASDAQ:AUDC) 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, risk, dividends, analyst recommendations, profitability, institutional ownership and valuation.

Profitability

This table compares Knowles and AudioCodes’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Knowles	7.27%	8.98%	6.15%
AudioCodes	5.66%	9.65%	5.45%

Earnings and Valuation

This table compares Knowles and AudioCodes”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Knowles	$573.50 million	3.20	-$237.80 million	$0.48	44.92
AudioCodes	$244.55 million	1.08	$15.31 million	$0.46	19.95

AudioCodes has lower revenue, but higher earnings than Knowles. AudioCodes is trading at a lower price-to-earnings ratio than Knowles, indicating that it is currently the more affordable of the two stocks.

Volatility & Risk

Knowles has a beta of 1.53, meaning that its share price is 53% more volatile than the S&P 500. Comparatively, AudioCodes has a beta of 0.94, meaning that its share price is 6% less volatile than the S&P 500.

Institutional and Insider Ownership

96.3% of Knowles shares are held by institutional investors. Comparatively, 68.1% of AudioCodes shares are held by institutional investors. 2.5% of Knowles shares are held by insiders. Comparatively, 48.8% of AudioCodes shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Analyst Recommendations

This is a breakdown of current ratings and target prices for Knowles and AudioCodes, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Knowles	0	2	2	0	2.50
AudioCodes	1	2	1	0	2.00

Knowles presently has a consensus target price of $27.00, indicating a potential upside of 25.23%. AudioCodes has a consensus target price of $11.25, indicating a potential upside of 22.56%. Given Knowles’ stronger consensus rating and higher possible upside, research analysts clearly believe Knowles is more favorable than AudioCodes.

Summary

Knowles beats AudioCodes on 11 of the 14 factors compared between the two stocks.

About Knowles

Knowles Corporation offers capacitors, radio frequency (RF) filtering products, balanced armature speakers, micro-acoustic microphones, and audio solutions in Asia, the United States, Europe, other Americas, and internationally. It operates through three segments: Precision Devices (PD); Medtech & Specialty Audio (MSA); and Consumer MEMS Microphones (CMM). The PD segment designs and delivers film, electrolytic, and mica capacitor products for use in power supplies and medical implants; electromagnetic interference filters; and RF filtering solutions for use in satellite communications and radar systems for defense applications. The MSA segment designs and manufactures balanced armature speakers and microphones for the hearing health, audio, and True Wireless Stereo (TWS) markets. The CMM segment designs and manufactures micro-electro-mechanical systems (MEMS) microphones and audio solutions used in applications that serve the ear, mobile, TWS, Internet of Things, computing, and smartphones markets. The company serves the defense, medtech, electric vehicle, industrial, communications, and consumer electronics markets through original equipment manufacturers, their contract manufacturers, suppliers, sales representatives, and distributors. Knowles Corporation was founded in 1946 and is headquartered in Itasca, Illinois.

About AudioCodes

AudioCodes Ltd. provides advanced communications software, products, and productivity solutions for the digital workplace worldwide. The company offers solutions, products, and services for unified communications, contact centers, hosted business services, Voice.AI, and service provider businesses. Its products include session border controllers, life cycle management solutions, VoIP network routing solutions, media gateways and servers, multi-service business routers, IP phones solutions, and value-added applications, as well as professional services. The company also offers One Voice Operations Center, a voice network management solution; Device Manager for administering business phones and meeting room solutions; AudioCodes Routing Manager for handling call routing in VoIP networks; and User Management Pack 365 simplifies user lifecycle and identity management across Microsoft Teams and Skype for Business deployments. In addition, it provides AudioCodes Live for Microsoft Teams, a portfolio of managed services for simplifying Teams adoption; appliances for Microsoft Skype/Teams for Business, such as survivable branch appliances, CCE, and CloudBond 365; and a range of value-added voice applications comprising SmartTAP, Voca, VoiceAI Connect, and Meeting Insights. Further, the company offers managed services; and AudioCodes Live Platform is a SaaS solution that enables service providers to offer their business customers a seamless migration to uCaaS solutions, such as Microsoft Teams and Zoom Phone. It primarily markets and sells its products through a direct sales force and sales representatives to original equipment manufacturers, network equipment providers, and systems integrators, enterprises, carriers, and distributors in the telecommunications and networking industries. AudioCodes Ltd. was incorporated in 1992 and is headquartered in Lod, Israel.