Reviewing Harmonic (NASDAQ:HLIT) and AltiGen Communications (OTCMKTS:ATGN)

Harmonic (NASDAQ:HLIT) and AltiGen Communications (OTCMKTS:ATGN) are both small-cap computer and technology companies, but which is the superior investment? We will contrast the two companies based on the strength of their profitability, dividends, valuation, analyst recommendations, earnings, risk and institutional ownership.

Volatility & Risk

Harmonic has a beta of 1.24, meaning that its share price is 24% more volatile than the S&P 500. Comparatively, AltiGen Communications has a beta of 0.96, meaning that its share price is 4% less volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of current ratings and target prices for Harmonic and AltiGen Communications, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Harmonic	2	2	2	0	2.00
AltiGen Communications	0	0	0	0	0.00

Harmonic presently has a consensus target price of $16.60, suggesting a potential downside of 2.35%. Given Harmonic’s stronger consensus rating and higher probable upside, equities analysts plainly believe Harmonic is more favorable than AltiGen Communications.

Profitability

This table compares Harmonic and AltiGen Communications’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Harmonic	-7.50%	7.84%	4.30%
AltiGen Communications	5.02%	7.81%	6.70%

Earnings & Valuation

This table compares Harmonic and AltiGen Communications”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Harmonic	$570.80 million	3.23	-$43.31 million	($0.37)	-45.95
AltiGen Communications	$13.87 million	0.89	$740,000.00	$0.02	23.75

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

Insider and Institutional Ownership

99.4% of Harmonic shares are held by institutional investors. 1.7% of Harmonic shares are held by insiders. Comparatively, 14.0% of AltiGen Communications shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company is poised for long-term growth.

Summary

Harmonic beats AltiGen Communications on 8 of the 14 factors compared between the two stocks.

About Harmonic

Harmonic Inc., together with its subsidiaries, provides broadband solutions worldwide. The company operates through Broadband and Video segments. The Broadband segment sells broadband access solutions and related services, including cOS software-based broadband access solutions to broadband operators; and cOS central cloud services, a subscription service for cOS customers. The Video segment sells video processing, production, and playout solutions and services to cable operators, and satellite and telco Pay-TV service providers, as well as to broadcast and media, including streaming media companies. Its video processing appliance solutions include network management and application software, and hardware products, such as encoders, video servers, high-density stream processing systems, and edge processors. This segment also provides VOS360 SaaS platform that provides both streaming and channel origination and distribution services; and software-as-a-service (SaaS) solutions, which enables the packaging and delivery of streaming services, including live streaming, VOD, catch-up TV, start-over TV, network-DVR and cloud-DVR services through HTTP streaming to various device along with dynamic and personal ad insertion. The company also provides technical support and professional services, such as maintenance and support, consulting, implementation, integration services, program management, technical design and planning, building and site preparation, integration and equipment installation, end-to-end system testing, and training, as well as SaaS-related support and deployment. It sells its products through its direct sales force, as well as through independent resellers and systems integrators. The company was incorporated in 1988 and is headquartered in San Jose, California.

About AltiGen Communications

Altigen Communications, Inc. designs, develops, markets, and supports integrated communications solutions worldwide. It provides MaxCS IP-PBX, a software-based phone system that provides customers with business communications solutions; MaxACD Voice Over Internet Protocol (VoIP) Contact Center, a software-based automatic call distribution engine, which offers call routing and call distribution options; MaxMobile that extends a set of business PBX functionality to smart phone devices; and MaxCommunicator, a Windows-based desktop application, which provides call control and visual voice mail management to the desktop. The company offers MaxAgent, a Windows-based desktop application to bring call control and workgroup information to call center agents; MaxSupervisor, a Windows-based desktop application for call center supervisors; and MaxACD for Skype, a call center solution. In addition, it provides hosted services, which include hosted IP PBX, Skype for Business, session initiation protocol trunk, call center solution, voice and video calling, conference calling, and various long-distance services; and software assurance services, which offer customers with software updates, patches, new releases, and technical support for the applications they are licensed to use. The company serves financial services, healthcare, retail, and business services industries through a channel of distributors and resellers. Altigen Communications, Inc. was incorporated in 1994 and is based in Milpitas, California.