Reviewing Sparton (NYSE:SPA) and Flex (FLEX)

Sparton (NYSE: SPA) and Flex (NASDAQ:FLEX) are both computer and technology companies, but which is the superior business? We will contrast the two companies based on the strength of their profitability, institutional ownership, dividends, valuation, analyst recommendations, earnings and risk.

Analyst Recommendations

This is a summary of recent ratings and target prices for Sparton and Flex, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Sparton 0 0 0 0 N/A
Flex 0 1 8 0 2.89

Flex has a consensus price target of $20.06, suggesting a potential upside of 38.08%. Given Flex’s higher possible upside, analysts clearly believe Flex is more favorable than Sparton.

Insider and Institutional Ownership

67.9% of Sparton shares are held by institutional investors. Comparatively, 94.5% of Flex shares are held by institutional investors. 5.0% of Sparton shares are held by company insiders. Comparatively, 0.8% of Flex shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.

Profitability

This table compares Sparton and Flex’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Sparton -2.53% 13.59% 4.63%
Flex 1.68% 14.32% 3.09%

Earnings and Valuation

This table compares Sparton and Flex’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Sparton $397.56 million 0.47 $1.31 million N/A N/A
Flex $25.44 billion 0.30 $428.53 million $0.80 18.16

Flex has higher revenue and earnings than Sparton.

Risk and Volatility

Sparton has a beta of 1.34, meaning that its stock price is 34% more volatile than the S&P 500. Comparatively, Flex has a beta of 0.88, meaning that its stock price is 12% less volatile than the S&P 500.

Summary

Flex beats Sparton on 8 of the 12 factors compared between the two stocks.

About Sparton

Sparton Corporation, together with its subsidiaries, provides design, development, and manufacturing services for electromechanical devices; and engineered products in electromechanical value stream worldwide. The company operates through two segments, Manufacturing & Design Services (MDS), and Engineered Components & Products (ECP). The MDS segment is involved in the contract design, manufacture, and aftermarket repair and refurbishment of printed circuit card assemblies, sub-assemblies, full product assemblies, and cable/wire harnesses, as well as development of embedded software and software quality assurance services in connection with medical devices and diagnostic equipment. This segment serves original equipment manufacturers and emerging technology customers serving the medical and biotechnology, military and aerospace, and industrial and commercial markets. The ECP segment designs, develops, and produces proprietary products for domestic and foreign defense, and commercial applications. It offers anti-submarine warfare devices for the U.S. Navy and foreign governments; rugged flat panel display systems for military panel PC workstations, air traffic control and industrial, and commercial marine applications; and high performance industrial grade computer systems and peripherals, as well as develops and markets commercial products for underwater acoustics and microelectromechanical based inertial measurement. This segment also performs an engineering development function for the United States military and prime defense contractors. Sparton Corporation was founded in 1900 and is headquartered in Schaumburg, Illinois.

About Flex

Flex Ltd. provides design, engineering, manufacturing, and supply chain services and solutions to original equipment manufacturers worldwide. It offers innovation services, such as innovations labs for supporting customer design and product development services from early concept stages; collective innovation platform, an ecosystem of technology solutions; Lab IX, a startup accelerator program; centers of excellence solutions in critical areas; interconnect technology center for printed circuits; and CloudLabs that enables customers to accelerate a spectrum of cloud, converged infrastructure, and datacenter strategies. The company also provides design and engineering services, including contract design and joint development manufacturing services, which cover various technical competencies, such as system architecture, user interface and industrial design, mechanical engineering, technology, enclosure systems, thermal and tooling design, electronic system design, reliability and failure analysis, and component level development engineering; and systems assembly and manufacturing services. In addition, it provides component product solutions, including rigid and flexible printed circuit board fabrication, and power supplies; after-market supply chain logistics services; and reverse logistics and repair services, such as returns management, exchange programs, complex repair, asset recovery, recycling and e-waste management for consumer and midrange products, printers, smart phones, consumer medical devices, notebooks, PC's, set-top boxes, game consoles, and infrastructure products. The company was formerly known as Flextronics International Ltd. and changed its name to Flex Ltd. in September 2016. Flex Ltd. was founded in 1990 and is based in Singapore.

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