Littelfuse (NASDAQ:LFUS) versus Novanta (NASDAQ:NOVT) Critical Review

Littelfuse (NASDAQ:LFUS) and Novanta (NASDAQ:NOVT) are both mid-cap computer and technology companies, but which is the superior business? We will compare the two companies based on the strength of their profitability, dividends, risk, analyst recommendations, institutional ownership, valuation and earnings.

Profitability

This table compares Littelfuse and Novanta’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Littelfuse	5.66%	9.89%	6.26%
Novanta	6.41%	14.70%	7.88%

Risk & Volatility

Littelfuse has a beta of 1.5, suggesting that its stock price is 50% more volatile than the S&P 500. Comparatively, Novanta has a beta of 1.54, suggesting that its stock price is 54% more volatile than the S&P 500.

Valuation and Earnings

This table compares Littelfuse and Novanta”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Littelfuse	$2.32 billion	2.53	$100.19 million	$5.25	45.01
Novanta	$960.31 million	3.71	$64.09 million	$1.47	67.72

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

Analyst Ratings

This is a breakdown of current recommendations and price targets for Littelfuse and Novanta, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Littelfuse	0	3	2	1	2.67
Novanta	1	2	0	0	1.67

Littelfuse currently has a consensus price target of $292.50, suggesting a potential upside of 23.79%. Novanta has a consensus price target of $133.00, suggesting a potential upside of 33.60%. Given Novanta’s higher probable upside, analysts clearly believe Novanta is more favorable than Littelfuse.

Insider and Institutional Ownership

96.1% of Littelfuse shares are owned by institutional investors. Comparatively, 98.3% of Novanta shares are owned by institutional investors. 2.5% of Littelfuse shares are owned by insiders. Comparatively, 1.2% of Novanta shares are owned 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.

Summary

Novanta beats Littelfuse on 8 of the 15 factors compared between the two stocks.

About Littelfuse

Littelfuse, Inc. designs, manufactures, and sells electronic components, modules, and subassemblies in the Americas, Asia-Pacific, and Europe. The company operates through Electronic, Transportation, and Industrial segments. The Electronics segment offers fuses and fuse accessories, positive temperature coefficient resettable fuses, electromechanical switches and interconnect solutions, polymer electrostatic discharge suppressors, varistors, reed switch based magnetic sensing products, and gas discharge tubes; and discrete transient voltage suppressor (TVS) diodes, TVS diode arrays, protection and switching thyristors, metal-oxide-semiconductor field-effect transistors and diodes, and insulated gate bipolar transistors. This segment serves industrial motor drives and power conversion, automotive electronics, electric vehicle and related charging infrastructure, aerospace, power supplies, data centers, telecommunications, medical devices, alternative energy, building and home automation, appliances, and mobile electronics markets. The Transportation segment provides blade, resettable, and high-current and high-voltage fuses, as well as battery cable protectors; fuses, switches, relays, circuit breakers, and power distribution modules; and sensor products. This segment serves heavy-duty truck, construction, agriculture, material handling, and marine. The Industrial segment offers industrial fuses, protection relays, contactors, transformers, residual current devices, ground fault circuit interrupters, residual current monitors, arc fault detection devices, and temperature sensors for use in renewable energy and energy storage systems, electric vehicle infrastructure, HVAC systems, industrial safety, non-residential construction, MRO, mining, and factory automation. It sells its products through distributors, direct sales force, and manufacturers' representatives. Littelfuse, Inc. was founded in 1927 and is headquartered in Chicago, Illinois.

About Novanta

Novanta, Inc. engages in the provision of core technology solutions to healthcare and advanced industrial original equipment manufacturers. It operates through the following segments: Photonics, Vision, and Precision Motion. The Photonics segment designs, manufactures, and markets photonics-based solutions, including laser scanning and laser beam delivery, CO2 laser, continuous wave and ultrafast laser, and optical light engine products. The Vision segment offers a range of medical grade technologies, including medical insufflators, pumps and related disposables, surgical displays and operating room integration technologies, optical data collection and machine vision technologies, radio frequency identification technologies, thermal printers, spectrometry technologies, and embedded touch screen solutions. The Precision Motion segment includes optical encoders, precision motor and motion control technology, air bearing spindles, and precision machined components to customers. The company was founded in 1968 and is headquartered in Bedford, MA.