Sonim Technologies (NASDAQ:SONM) and Saratoga Investment (NYSE:SAR) Critical Analysis

Sonim Technologies (NASDAQ:SONM) and Saratoga Investment (NYSE:SAR) are both small-cap finance companies, but which is the superior business? We will compare the two companies based on the strength of their profitability, earnings, analyst recommendations, risk, valuation, dividends and institutional ownership.

Valuation & Earnings

This table compares Sonim Technologies and Saratoga Investment”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Sonim Technologies	$93.63 million	0.05	-$20.66 million	($8.02)	-0.38
Saratoga Investment	$8.73 million	24.16	$36.60 million	($0.25)	-54.24

Saratoga Investment has lower revenue, but higher earnings than Sonim Technologies. Saratoga Investment is trading at a lower price-to-earnings ratio than Sonim Technologies, indicating that it is currently the more affordable of the two stocks.

Insider & Institutional Ownership

3.3% of Sonim Technologies shares are owned by institutional investors. Comparatively, 19.1% of Saratoga Investment shares are owned by institutional investors. 4.6% of Sonim Technologies shares are owned by company insiders. Comparatively, 10.6% of Saratoga Investment shares are owned by company 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.

Analyst Recommendations

This is a breakdown of recent recommendations for Sonim Technologies and Saratoga Investment, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Sonim Technologies	1	0	0	0	1.00
Saratoga Investment	1	4	0	0	1.80

Saratoga Investment has a consensus target price of $19.67, indicating a potential upside of 45.02%. Given Saratoga Investment’s stronger consensus rating and higher probable upside, analysts clearly believe Saratoga Investment is more favorable than Sonim Technologies.

Profitability

This table compares Sonim Technologies and Saratoga Investment’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Sonim Technologies	N/A	N/A	-40.82%
Saratoga Investment	-3.35%	8.66%	2.78%

Risk & Volatility

Sonim Technologies has a beta of 1.7, meaning that its share price is 70% more volatile than the S&P 500. Comparatively, Saratoga Investment has a beta of 0.57, meaning that its share price is 43% less volatile than the S&P 500.

Summary

Saratoga Investment beats Sonim Technologies on 9 of the 12 factors compared between the two stocks.

About Sonim Technologies

Sonim Technologies, Inc. provides ruggedized mobile phones and accessories for task workers. The company offers ruggedized mobile phones, such as Sonim XP10, Sonim XP5plus, Sonim XP3plus, and Sonim XP Pro; Sonim mobile hotspot; industrial-grade accessories. It sells its mobile phones and accessories primarily to wireless carriers in the United States and Canada; and sells wireless carrier channels through distribution channels in North America and Europe. The company serves transportation and logistics, construction, manufacturing, facilities management, energy and utility, mining, and public safety sectors. The company was formerly known as NaviSpin.com, Inc. and changed its name to Sonim Technologies, Inc. in December 2001. Sonim Technologies, Inc. was incorporated in 1999 and is headquartered in San Diego, California.

About Saratoga Investment

Saratoga Investment Corp. is a business development company specializing in leveraged and management buyouts, acquisition financings, growth financings, recapitalization, debt refinancing, and transitional financing transactions at the lower end of middle market companies. It structures its investments as debt and equity by investing through first and second lien loans, mezzanine debt, co-investments, select high yield bonds, senior secured bonds, unsecured bonds, and preferred and common equity. The firm prefers to invest in aerospace, automotive aftermarket and services, business products and services, consumer products and services, education, environmental services, industrial services, financial services, food and beverage, healthcare products and services, logistics, distribution, manufacturing, restaurants services, food services, software services, technology services, specialty chemical, media and telecommunications. It seeks to invest in the United States. The firm primarily invests $5 million to $50 million in companies having EBITDA of $2 million or greater and revenues of $8 million to $250 million. The firm prefer to take a majority stake. It invests through direct lending as well as participation in loan syndicates. The firm was formerly known as GSC Investment Corp. Saratoga Investment Corp. was formed on 2007 and is based in New York, New York with an additional office in Florham Park, New Jersey.