Reviewing OSI Systems (NASDAQ:OSIS) and Socket Mobile (NASDAQ:SCKT)

OSI Systems (NASDAQ:OSIS) and Socket Mobile (NASDAQ:SCKT) are both technology companies, but which is the better investment? We will contrast the two companies based on the strength of their earnings, valuation, profitability, institutional ownership, analyst recommendations, dividends and risk.

Insider & Institutional Ownership

89.2% of OSI Systems shares are owned by institutional investors. Comparatively, 3.8% of Socket Mobile shares are owned by institutional investors. 4.8% of OSI Systems shares are owned by insiders. Comparatively, 54.8% of Socket Mobile shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company will outperform the market over the long term.

Volatility and Risk

OSI Systems has a beta of 1.26, meaning that its stock price is 26% more volatile than the S&P 500. Comparatively, Socket Mobile has a beta of 1.46, meaning that its stock price is 46% more volatile than the S&P 500.

Profitability

This table compares OSI Systems and Socket Mobile’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
OSI Systems	8.79%	21.57%	7.19%
Socket Mobile	-102.45%	-423.92%	-106.33%

Analyst Recommendations

This is a summary of current ratings for OSI Systems and Socket Mobile, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
OSI Systems	0	2	5	0	2.71
Socket Mobile	1	0	0	0	1.00

OSI Systems currently has a consensus target price of $276.71, indicating a potential upside of 37.42%. Given OSI Systems’ stronger consensus rating and higher possible upside, equities research analysts plainly believe OSI Systems is more favorable than Socket Mobile.

Valuation and Earnings

This table compares OSI Systems and Socket Mobile”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
OSI Systems	$1.79 billion	1.77	$154.71 million	$9.33	21.58
Socket Mobile	$15.08 million	0.15	-$14.38 million	($1.79)	-0.15

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

Summary

OSI Systems beats Socket Mobile on 12 of the 14 factors compared between the two stocks.

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.

About Socket Mobile

Socket Mobile, Inc. provides data capture and delivery solutions in the United States, Europe, Asia, and internationally. Its products and solutions are integrated into mobile applications for applications in the areas of point of sale, commercial services, asset tracking, manufacturing and quality control processes, transportation and logistics, event management, medical, and education. The company also offers cordless data capture devices that connect through Bluetooth and work with applications running on smartphones, mobile computers, and tablets; SocketScan and DuraScan 700 series, companion scanners and 800 series, attachable scanners, and wearables; and DuraSled, a barcode scanning sled that protects phones from impact damage and provides charging solutions. In addition, it offers D600, a handheld model to reads and writes various types of electronic SmartTags and transfers data with near-field communication (NFC); S550, a contactless membership card reader/writer; and S370 product that supports barcode scanning, and NFC reading and writing technologies. Further, the company provides SocketCam C820 and C860, which are camera-based barcode scanners; software developer kits, such as CaptureSDK that enables the App providers to modify captured data, control the placement of the barcoded or RFID data in their applications, and control the feedback to the user. It serves retail, commercial services, industrial and manufacturing, transportation and logistics, and healthcare industries through a network of distributors, online resellers, and application providers, as well as online stores. The company was formerly known as Socket Communications, Inc. and changed its name to Socket Mobile, Inc. in April 2008. Socket Mobile, Inc. was founded in 1992 and is headquartered in Fremont, California.