Critical Analysis: Data I/O (NASDAQ:DAIO) versus CSP (NASDAQ:CSPI)

CSP (NASDAQ:CSPI) and Data I/O (NASDAQ:DAIO) are both small-cap technology companies, but which is the better investment? We will compare the two companies based on the strength of their risk, dividends, earnings, profitability, valuation, analyst recommendations and institutional ownership.

Analyst Ratings

This is a breakdown of recent ratings and target prices for CSP and Data I/O, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
CSP	1	0	0	0	1.00
Data I/O	1	1	1	2	2.80

Data I/O has a consensus price target of $5.11, suggesting a potential upside of 84.48%. Given Data I/O’s stronger consensus rating and higher probable upside, analysts plainly believe Data I/O is more favorable than CSP.

Insider and Institutional Ownership

26.7% of CSP shares are owned by institutional investors. Comparatively, 37.0% of Data I/O shares are owned by institutional investors. 15.0% of CSP shares are owned by insiders. Comparatively, 4.1% of Data I/O shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Volatility and Risk

CSP has a beta of 0.87, suggesting that its share price is 13% less volatile than the S&P 500. Comparatively, Data I/O has a beta of 1.32, suggesting that its share price is 32% more volatile than the S&P 500.

Profitability

This table compares CSP and Data I/O’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
CSP	-1.22%	-1.56%	-0.99%
Data I/O	-48.73%	-66.83%	-40.69%

Earnings & Valuation

This table compares CSP and Data I/O”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
CSP	$58.73 million	1.33	-$90,000.00	($0.07)	-110.86
Data I/O	$21.50 million	1.21	-$5.24 million	($0.93)	-2.98

CSP has higher revenue and earnings than Data I/O. CSP is trading at a lower price-to-earnings ratio than Data I/O, indicating that it is currently the more affordable of the two stocks.

Summary

CSP beats Data I/O on 8 of the 15 factors compared between the two stocks.

About CSP

CSP Inc. develops and markets IT integration solutions, security products, managed IT services, cloud services, purpose-built network adapters, and cluster computer systems for commercial and defense customers worldwide. It operates in two segments, Technology Solutions and High Performance Products. The Technology Solutions segment provides third-party computer hardware and software as a value-added reseller to various customers in web and infrastructure hosting, education, telecommunications, healthcare services, distribution, financial and professional services, and manufacturing industries. This segment also offers professional IT consulting services, such as planning, designing, assessment, implementation, migration, optimization, and project management; storage and virtualization solutions; enterprise security intrusion prevention, network access control, and unified threat management services; and IT security compliance services. In addition, this segment provides unified communications, wireless, and routing and switching solutions; custom software applications and solutions development and support services; optimization, maintenance, and technical support services; and managed IT services, such as monitoring, reporting, and management of alerts for the resolution and preventive general IT, as well as IT security support tasks. Further, this segment offers managed and cloud services, such as proactive monitoring and remote management of IT infrastructure, managed and hosted unified communication services, security, and backup and replication. The High Performance Products segment offers ARIA Software-Defined Security, a cybersecurity solution; ARIA Zero Trust PROTECT that stopping the attacks that are used to attack critical infrastructure applications; Myricom network adapters; and multicomputer products for digital signal processing applications in the defense markets. CSP Inc. was incorporated in 1968 and is headquartered in Lowell, Massachusetts.

About Data I/O

Data I/O Corporation, together with its subsidiaries, engages in the design, manufacture, and sale of programming and security deployment systems and services for electronic device manufacturers in the United States, Europe, and internationally. Its programming system products are used to program integrated circuits (ICs) with the specific data for the ICs. The company offers PSV handlers off-line automated programming systems, such as PSV2800 automated programming system which focuses on high-volume manufacturing in a lower cost platform; PSV7000 automated programming system for security deployment upgrades; PSV5000 automated programming system that combines mid-range capacity and supports security deployment; and PSV3500 automated programming system which provides basic programming needs. It also provides SentriX security deployment system; and LumenX and non-automated FlashPAK III programming systems. In addition, the company offers hardware support, system installation and repair, and device programming services. It markets and sells its products to original equipment manufacturers in automotive and consumer electronics, internet of things, and industrial, as well as electronic manufacturing service contract manufacturers through direct sales, and indirect sales representatives and distributors. Data I/O Corporation was incorporated in 1969 and is headquartered in Redmond, Washington.