Critical Survey: Digital Ally (DGLY) and PC Tel (PCTI)

Digital Ally (NASDAQ:DGLY) and PC Tel (NASDAQ:PCTI) are both small-cap industrial products companies, but which is the superior stock? We will compare the two businesses based on the strength of their institutional ownership, valuation, earnings, analyst recommendations, profitability, risk and dividends.

Earnings and Valuation

This table compares Digital Ally and PC Tel’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Digital Ally $12.77 million 1.80 -$12.25 million ($1.50) -1.98
PC Tel $91.44 million 0.96 $3.82 million $0.10 47.80

PC Tel has higher revenue and earnings than Digital Ally. Digital Ally is trading at a lower price-to-earnings ratio than PC Tel, indicating that it is currently the more affordable of the two stocks.

Institutional and Insider Ownership

4.2% of Digital Ally shares are held by institutional investors. Comparatively, 75.5% of PC Tel shares are held by institutional investors. 19.8% of Digital Ally shares are held by company insiders. Comparatively, 6.8% of PC Tel shares are held 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.

Risk and Volatility

Digital Ally has a beta of 2.93, indicating that its stock price is 193% more volatile than the S&P 500. Comparatively, PC Tel has a beta of 0.2, indicating that its stock price is 80% less volatile than the S&P 500.

Profitability

This table compares Digital Ally and PC Tel’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Digital Ally -112.99% -1,999.82% -86.43%
PC Tel 2.35% 1.41% 1.22%

Dividends

PC Tel pays an annual dividend of $0.22 per share and has a dividend yield of 4.6%. Digital Ally does not pay a dividend. PC Tel pays out 220.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Analyst Recommendations

This is a summary of current recommendations and price targets for Digital Ally and PC Tel, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Digital Ally 0 1 1 0 2.50
PC Tel 0 1 1 0 2.50

Digital Ally presently has a consensus price target of $4.50, suggesting a potential upside of 51.52%. PC Tel has a consensus price target of $5.25, suggesting a potential upside of 9.83%. Given Digital Ally’s higher possible upside, analysts clearly believe Digital Ally is more favorable than PC Tel.

Summary

PC Tel beats Digital Ally on 9 of the 14 factors compared between the two stocks.

About Digital Ally

Digital Ally, Inc. produces and sells digital video imaging and storage products for use in law enforcement, security, and commercial applications in the United States and internationally. Its digital audio/video recording, storage, and other products include an in-car digital audio/video recorder that is contained in a rear view mirror for law enforcement vehicles and commercial fleets; and hands-free automatic activated body-worn cameras and in-car video systems, as well as provides its law enforcement customers with audio/video surveillance from multiple vantage points. The company also provides VuLink, an in-car device that enables an in-car and body worn digital audio/video camera system to automatically and simultaneously start recording; and Digital Ally, a suite of data management Web-based tools to assist fleet managers in the organization, archival, and management of videos and telematics information. In addition, its digital audio/video recording, storage, and other products comprise a miniature body-worn digital video system; VuVault.net, a law enforcement cloud storage solution, including cloud-based fleet management and driver monitoring/training applications; and FleetVU Manager, a Web-based software for commercial fleet tracking and monitoring. The company sells its products through direct sales and third-party distributors. Digital Ally, Inc. is headquartered in Lenexa, Kansas.

About PC Tel

PCTEL, Inc., together with its subsidiaries, delivers performance critical telecom solutions in the Asia Pacific, Europe, the Middle East, Africa, and the Americas. The company operates in two segments, Connected Solutions and RF Solutions. The Connected Solutions segment designs and delivers precision antennas, which are used primarily in small cells, enterprise Wi-Fi access points, fleet management and transit systems, and in equipment and devices for the Industrial Internet of Things. The RF Solutions segment provides test tools that enhance the performance of wireless networks. The company serves public and private carriers, wireless infrastructure providers, wireless equipment distributors, and value added resellers, as well as original equipment manufacturer providers. PCTEL, Inc. was founded in 1994 and is headquartered in Bloomingdale, Illinois.

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