Reviewing GrafTech International (NYSE:EAF) and Energy Focus (NASDAQ:EFOI)

Energy Focus (NASDAQ:EFOI) and GrafTech International (NYSE:EAF) are both small-cap industrials companies, but which is the superior business? We will contrast the two businesses based on the strength of their risk, valuation, institutional ownership, analyst recommendations, profitability, dividends and earnings.

Risk & Volatility

Energy Focus has a beta of 2.17, suggesting that its share price is 117% more volatile than the S&P 500. Comparatively, GrafTech International has a beta of 1.85, suggesting that its share price is 85% more volatile than the S&P 500.

Profitability

This table compares Energy Focus and GrafTech International’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Energy Focus	-23.77%	-42.44%	-25.33%
GrafTech International	-34.58%	N/A	-17.50%

Institutional and Insider Ownership

3.7% of Energy Focus shares are held by institutional investors. Comparatively, 92.8% of GrafTech International shares are held by institutional investors. 48.9% of Energy Focus shares are held by insiders. Comparatively, 1.2% of GrafTech International shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.

Analyst Recommendations

This is a summary of current ratings and recommmendations for Energy Focus and GrafTech International, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Energy Focus	1	0	0	0	1.00
GrafTech International	3	3	0	0	1.50

GrafTech International has a consensus target price of $10.67, suggesting a potential upside of 61.74%. Given GrafTech International’s stronger consensus rating and higher probable upside, analysts plainly believe GrafTech International is more favorable than Energy Focus.

Earnings and Valuation

This table compares Energy Focus and GrafTech International”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Energy Focus	$3.56 million	5.05	-$1.03 million	($0.25)	-11.28
GrafTech International	$504.13 million	0.34	-$219.84 million	($6.80)	-0.97

Energy Focus has higher earnings, but lower revenue than GrafTech International. Energy Focus is trading at a lower price-to-earnings ratio than GrafTech International, indicating that it is currently the more affordable of the two stocks.

Summary

GrafTech International beats Energy Focus on 7 of the 13 factors compared between the two stocks.

About Energy Focus

Energy Focus, Inc., together with its subsidiaries, designs, develops, manufactures, markets, and sells energy-efficient lighting systems, and controls and ultraviolet-C light disinfection products in the United States and internationally. It offers military maritime market light-emitting diode (LED) lighting products, such as Military-grade Intellitube retrofit TLED and the Invisitube ultra-low EMI TLED; and Military-grade fixtures, including LED globe lights, berth lights; high-bay fixtures and LED retrofit kits to serve the United States navy and allied foreign navies. The company also provides RedCap emergency battery backup TLEDs; EnFocus lighting platform, including dimming and color tuning; and LED retrofit solutions for linear fluorescent lamps, downlights, and retrofit kits for low-bay, high-bay and office applications; LED dock lights. It sells its products to military maritime, industrial, and commercial markets through direct sales employees, independent sales representatives, lighting agents, and distributors, as well as via e-commerce. The company was formerly known as Fiberstars, Inc. and changed its name to Energy Focus, Inc. in May 2007. Energy Focus, Inc. was founded in 1985 and is headquartered in Solon, Ohio.

About GrafTech International

GrafTech International Ltd. research, develops, manufactures, and sells graphite and carbon-based solutions worldwide. The company offers graphite electrodes to produce electric arc furnace steel and other ferrous and non-ferrous metals; and petroleum needle coke, a crystalline form of carbon used in the production of graphite electrodes and synthetic graphite. It sells its products primarily through direct sales force, independent sales representatives, and distributors. GrafTech International Ltd. was founded in 1886 and is headquartered in Brooklyn Heights, Ohio.