Head to Head Analysis: Arlo Technologies (NYSE:ARLO) vs. Richardson Electronics (NASDAQ:RELL)

Richardson Electronics (NASDAQ:RELL) and Arlo Technologies (NYSE:ARLO) are both small-cap technology companies, but which is the better stock? We will contrast the two businesses based on the strength of their analyst recommendations, valuation, institutional ownership, dividends, earnings, profitability and risk.

Earnings and Valuation

This table compares Richardson Electronics and Arlo Technologies”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Richardson Electronics	$228.56 million	1.31	$6.38 million	$0.58	34.69
Arlo Technologies	$596.79 million	2.24	$14.93 million	$0.22	55.84

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

Profitability

This table compares Richardson Electronics and Arlo Technologies’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Richardson Electronics	3.57%	4.82%	3.85%
Arlo Technologies	4.11%	16.08%	6.95%

Institutional & Insider Ownership

72.0% of Richardson Electronics shares are held by institutional investors. Comparatively, 83.2% of Arlo Technologies shares are held by institutional investors. 31.7% of Richardson Electronics shares are held by company insiders. Comparatively, 2.9% of Arlo Technologies shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Analyst Ratings

This is a breakdown of recent recommendations for Richardson Electronics and Arlo Technologies, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Richardson Electronics	0	0	2	1	3.33
Arlo Technologies	0	2	5	0	2.71

Richardson Electronics presently has a consensus price target of $26.00, suggesting a potential upside of 29.22%. Arlo Technologies has a consensus price target of $20.40, suggesting a potential upside of 66.07%. Given Arlo Technologies’ higher probable upside, analysts clearly believe Arlo Technologies is more favorable than Richardson Electronics.

Volatility and Risk

Richardson Electronics has a beta of 1.28, meaning that its share price is 28% more volatile than the S&P 500. Comparatively, Arlo Technologies has a beta of 1.59, meaning that its share price is 59% more volatile than the S&P 500.

Summary

Arlo Technologies beats Richardson Electronics on 11 of the 15 factors compared between the two stocks.

About Richardson Electronics

Richardson Electronics Ltd. (NASDAQ: RELL) is a global provider of engineered solutions, electronic components and replacement parts for specialized industrial and healthcare applications. The company serves original equipment manufacturers, government agencies, medical facilities, distributors and other commercial customers through its product portfolio and technical support services. Its Power and Microwave Technologies business supplies components and systems used in power conversion, renewable energy, semiconductor manufacturing, aerospace and defense, telecommunications, and other industrial markets.

About Arlo Technologies

Arlo Technologies develops and sells connected home security products and services. Its offerings include indoor and outdoor security cameras, video doorbells, floodlight cameras and related smart-home devices, which let users monitor their properties through a mobile app. The company also offers subscription services, including cloud video storage, enhanced security features and professional monitoring. Arlo’s products and services are available in markets including North America, Europe and Australia.