Precision Optics (NASDAQ:POCI) and Pro-Dex (NASDAQ:PDEX) Critical Contrast

Precision Optics (NASDAQ:POCI) and Pro-Dex (NASDAQ:PDEX) are both small-cap healthcare companies, but which is the superior business? We will contrast the two businesses based on the strength of their analyst recommendations, institutional ownership, risk, earnings, profitability, valuation and dividends.

Profitability

This table compares Precision Optics and Pro-Dex’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Precision Optics	-11.51%	-23.92%	-13.05%
Pro-Dex	17.62%	25.13%	16.02%

Risk and Volatility

Precision Optics has a beta of 0.34, meaning that its share price is 66% less volatile than the S&P 500. Comparatively, Pro-Dex has a beta of 0.04, meaning that its share price is 96% less volatile than the S&P 500.

Institutional & Insider Ownership

13.7% of Precision Optics shares are held by institutional investors. Comparatively, 15.3% of Pro-Dex shares are held by institutional investors. 14.4% of Precision Optics shares are held by insiders. Comparatively, 45.9% of Pro-Dex shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Earnings and Valuation

This table compares Precision Optics and Pro-Dex”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Precision Optics	$31.53 million	1.50	-$5.78 million	($0.46)	-9.40
Pro-Dex	$77.55 million	2.66	$13.66 million	$4.13	15.63

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

Analyst Recommendations

This is a breakdown of recent ratings and price targets for Precision Optics and Pro-Dex, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Precision Optics	1	0	0	0	1.00
Pro-Dex	0	1	1	1	3.00

Pro-Dex has a consensus price target of $74.00, suggesting a potential upside of 14.63%. Given Pro-Dex’s stronger consensus rating and higher probable upside, analysts clearly believe Pro-Dex is more favorable than Precision Optics.

Summary

Pro-Dex beats Precision Optics on 14 of the 15 factors compared between the two stocks.

About Precision Optics

Precision Optics Corporation, Inc. designs, develops, manufactures, and sells specialized optical and illumination systems and related components primarily in the United States and the European Economic Area. It offers medical instrumentation products, including endoscopes and endocouplers, as well as other custom imaging and illumination products, such as Microprecision lenses and micro medical cameras, and 3D endoscopes for use in minimally invasive surgical procedures by hospitals and physicians. The company also provides components and assemblies for industrial and military use. It markets its products to medical device companies. The company was incorporated in 1982 and is based in Gardner, Massachusetts.

About Pro-Dex

Pro-Dex, Inc. designs, develops, manufactures, and sells powered surgical instruments for medical device original equipment manufacturers worldwide. The company offers autoclavable, battery-powered and electric, and multi-function surgical drivers and shavers that are primarily used in the orthopedic, thoracic, and craniomaxillofacial markets. It also provides engineering, quality, and regulatory consulting services; and manufactures and sells rotary air motors to various industries. The company's products are used in hospitals, medical engineering labs, scientific research facilities, and high-tech manufacturing operations. Pro-Dex, Inc. was founded in 1978 and is headquartered in Irvine, California.