Lightwave Logic (NASDAQ:LWLG) versus NAPCO Security Technologies (NASDAQ:NSSC) Critical Analysis

Lightwave Logic (NASDAQ:LWLG) and NAPCO Security Technologies (NASDAQ:NSSC) are both small-cap technology companies, but which is the superior investment? We will contrast the two businesses based on the strength of their institutional ownership, earnings, dividends, profitability, risk, valuation and analyst recommendations.

Risk and Volatility

Lightwave Logic has a beta of 2.4, indicating that its share price is 140% more volatile than the S&P 500. Comparatively, NAPCO Security Technologies has a beta of 1.51, indicating that its share price is 51% more volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of current recommendations for Lightwave Logic and NAPCO Security Technologies, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Lightwave Logic	1	1	1	0	2.00
NAPCO Security Technologies	0	2	4	0	2.67

Lightwave Logic presently has a consensus price target of $10.00, suggesting a potential upside of 142.13%. NAPCO Security Technologies has a consensus price target of $51.33, suggesting a potential upside of 32.99%. Given Lightwave Logic’s higher possible upside, equities research analysts plainly believe Lightwave Logic is more favorable than NAPCO Security Technologies.

Profitability

This table compares Lightwave Logic and NAPCO Security Technologies’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Lightwave Logic	-9,143.60%	-30.34%	-28.76%
NAPCO Security Technologies	21.27%	31.41%	26.06%

Valuation & Earnings

This table compares Lightwave Logic and NAPCO Security Technologies”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Lightwave Logic	$240,000.00	2,653.01	-$20.31 million	($0.16)	-25.81
NAPCO Security Technologies	$202.32 million	6.82	$43.03 million	$1.21	31.90

NAPCO Security Technologies has higher revenue and earnings than Lightwave Logic. Lightwave Logic is trading at a lower price-to-earnings ratio than NAPCO Security Technologies, indicating that it is currently the more affordable of the two stocks.

Insider & Institutional Ownership

27.0% of Lightwave Logic shares are held by institutional investors. Comparatively, 85.1% of NAPCO Security Technologies shares are held by institutional investors. 2.2% of Lightwave Logic shares are held by company insiders. Comparatively, 5.7% of NAPCO Security Technologies shares are held by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Summary

NAPCO Security Technologies beats Lightwave Logic on 10 of the 13 factors compared between the two stocks.

About Lightwave Logic

Lightwave Logic, Inc. focuses on the development of photonic devices and electro-optical polymer materials systems for fiber-optic data communications, telecommunications, and optical computing markets in the United States. The company is involved in the designing and synthesizing of organic chromophores for use in its electro-optic polymer systems and photonic device designs. It also offers electro-optic modulators, which converts data from electric signals to optical signals for transmission over fiber-optic cables; and polymer photonic integrated circuits, a photonic device, which integrates various photonic functions on a single chip. In addition, the company provides the ridge waveguide modulator, a modulator that fabricates the waveguide within a layer of its electro-optic polymer system. It focuses on selling its products to electro-optic device manufacturers, contract manufacturers, original equipment manufacturers, foundries, packaging and assembly manufacturers, etc.; and semiconductor companies, optical network companies, Web 2.0/3.0 media companies, computing companies, telecommunications companies, aerospace companies, automotive companies, and government agencies and defense entities. The company was formerly known as Third-order Nanotechnologies, Inc. and changed its name to Lightwave Logic, Inc. in March 2008. Lightwave Logic, Inc. was founded in 1991 and is headquartered in Englewood, Colorado.

About NAPCO Security Technologies

Napco Security Technologies, Inc. develops, manufactures, and sells electronic security systems for commercial, residential, institutional, industrial, and governmental applications in the United States and internationally. Its access control systems include various types of identification readers, control panels, PC-based computers, and electronically activated door-locking devices; intrusion and fire alarm systems, consists of various detectors, a control panel, a digital keypad and signaling equipment; and door locking devices comprise microprocessor-based electronic door locks with push button, card readers and bio-metric operation, door alarms, mechanical door locks, and simple dead bolt locks. The company’s alarm systems include automatic communicators, cellular communication devices, control panels, combination control panels/digital communicators and digital keypad systems, fire alarm control panels, and area detectors; and video surveillance systems comprise video cameras, control panels, video monitors, or PCs. It also buys and resells various identification readers, video cameras, PC-based computers, and various peripheral equipment for access control and video surveillance systems; offers school security products; and markets peripheral and related equipment manufactured by other companies. The company markets and sells its products to independent distributors, dealers, and installers of security equipment. Napco Security Technologies, Inc. was founded in 1969 and is headquartered in Amityville, New York.