Head-To-Head Review: Fabrinet (NYSE:FN) versus OSI Systems (NASDAQ:OSIS)

Fabrinet (NYSE:FN) and OSI Systems (NASDAQ:OSIS) are both computer and technology companies, but which is the superior investment? We will contrast the two businesses based on the strength of their institutional ownership, dividends, profitability, risk, valuation, earnings and analyst recommendations.

Insider and Institutional Ownership

97.4% of Fabrinet shares are owned by institutional investors. Comparatively, 89.2% of OSI Systems shares are owned by institutional investors. 0.4% of Fabrinet shares are owned by company insiders. Comparatively, 5.2% of OSI Systems shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.

Analyst Recommendations

This is a summary of recent ratings for Fabrinet and OSI Systems, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Fabrinet	0	4	4	0	2.50
OSI Systems	0	1	5	0	2.83

Fabrinet currently has a consensus price target of $312.33, indicating a potential downside of 17.92%. OSI Systems has a consensus price target of $230.83, indicating a potential downside of 2.52%. Given OSI Systems’ stronger consensus rating and higher possible upside, analysts clearly believe OSI Systems is more favorable than Fabrinet.

Profitability

This table compares Fabrinet and OSI Systems’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Fabrinet	9.72%	17.77%	12.88%
OSI Systems	8.73%	18.69%	7.51%

Valuation & Earnings

This table compares Fabrinet and OSI Systems”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Fabrinet	$3.42 billion	3.98	$332.53 million	$9.18	41.45
OSI Systems	$1.71 billion	2.33	$149.64 million	$8.70	27.22

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

Risk and Volatility

Fabrinet has a beta of 1.08, meaning that its stock price is 8% more volatile than the S&P 500. Comparatively, OSI Systems has a beta of 1.3, meaning that its stock price is 30% more volatile than the S&P 500.

Summary

Fabrinet beats OSI Systems on 8 of the 14 factors compared between the two stocks.

About Fabrinet

Fabrinet provides optical packaging and precision optical, electro-mechanical, and electronic manufacturing services in North America, the Asia-Pacific, and Europe. The company offers a range of advanced optical and electro-mechanical capabilities in the manufacturing process, including process design and engineering, supply chain management, manufacturing, printed circuit board assembly, advanced packaging, integration, final assembly, and testing. Its products include switching products, including reconfigurable optical add-drop multiplexers, optical amplifiers, modulators, and other optical components and modules that enable network managers to route voice, video, and data communications traffic through fiber optic cables at various wavelengths, speeds, and over various distances. The company's products also comprise tunable lasers, transceivers, and transponders; and active optical cables, which provide high-speed interconnect capabilities for data centers and computing clusters, as well as Infiniband, Ethernet, fiber channel, and optical backplane connectivity. In addition, it provides solid state, diode-pumped, gas, and fiber lasers used in semiconductor processing, biotechnology and medical device, metrology, and material processing industries; and differential pressure, micro-gyro, fuel, and other sensors used in automobiles, as well as non-contact temperature measurement sensors for the medical industry. Further, the company designs and fabricates application-specific crystals, lenses, prisms, mirrors, laser components, and substrates; and other custom and standard borosilicate, clear fused quartz, and synthetic fused silica glass products. It serves original equipment manufacturers of optical communication components, modules and sub-systems, industrial lasers, automotive components, medical devices, and sensors. The company was incorporated in 1999 and is based in Grand Cayman, the Cayman Islands.

About OSI Systems

OSI Systems, Inc. designs and manufactures electronic systems and components. It operates in three segments: Security, Healthcare, and Optoelectronics and Manufacturing. The Security segment offers baggage and parcel inspection, cargo and vehicle inspection, hold baggage and people screening, radiation monitoring, explosive and narcotics trace detection systems, and optical inspection systems under the Rapiscan name. It also provides site design, installation, training, and technical support services; and turnkey security screening solutions under the S2 name. The Healthcare segment offers patient monitoring, cardiology and remote monitoring, and connected care systems and accessories under the Spacelabs name for use in critical care, emergency, and perioperative areas within hospitals, physicians' offices, medical clinics, and ambulatory surgery centers. The Optoelectronics and Manufacturing segment provides optoelectronic devices under the OSI Optoelectronics, OSI LaserDiode, OSI Laserscan, and Advanced Photonix names for the aerospace and defense, avionics, medical imaging and diagnostics, biochemistry analysis, pharmaceutical, nanotechnology, telecommunications, construction, and homeland security markets. It also offers electronics manufacturing services to original equipment manufacturers and end users for medical, automotive, defense, aerospace, industrial, and consumer applications under the OSI Electronics, APlus Products, Altaflex, and PFC Flexible Circuits names; LCD displays for medical, industrial, and consumer electronics applications; and flex circuits for OEM customers. This segment offers laser-based remote sensing devices to detect and classify vehicles in toll and traffic management systems under the OSI Laserscan and Autosense names; and solid-state laser products for aerospace, defense, telecommunication, and medical applications under the OSI LaserDiode name. The company was incorporated in 1987 and is headquartered in Hawthorne, California.