Critical Analysis: Heritage Media (OTCMKTS:OLVI) and Richardson Electronics (NASDAQ:RELL)

Heritage Media (OTCMKTS:OLVI) and Richardson Electronics (NASDAQ:RELL) are both small-cap technology companies, but which is the superior investment? We will compare the two businesses based on the strength of their profitability, risk, institutional ownership, dividends, analyst recommendations, valuation and earnings.

Institutional and Insider Ownership

72.0% of Richardson Electronics shares are held by institutional investors. 33.4% of Richardson Electronics shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Risk and Volatility

Heritage Media has a beta of -2.02, meaning that its share price is 302% less volatile than the S&P 500. Comparatively, Richardson Electronics has a beta of 1.28, meaning that its share price is 28% more volatile than the S&P 500.

Profitability

This table compares Heritage Media and Richardson Electronics’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Heritage Media	-25.04%	N/A	N/A
Richardson Electronics	2.79%	3.55%	2.83%

Valuation & Earnings

This table compares Heritage Media and Richardson Electronics”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Heritage Media	$82.76 million	1.80	-$20.70 million	($0.04)	-5.81
Richardson Electronics	$228.56 million	1.32	$6.38 million	$0.44	46.95

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

Analyst Ratings

This is a breakdown of current recommendations and price targets for Heritage Media and Richardson Electronics, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Heritage Media	0	0	0	0	0.00
Richardson Electronics	0	1	1	1	3.00

Richardson Electronics has a consensus target price of $24.00, indicating a potential upside of 16.17%. Given Richardson Electronics’ stronger consensus rating and higher probable upside, analysts plainly believe Richardson Electronics is more favorable than Heritage Media.

Summary

Richardson Electronics beats Heritage Media on 14 of the 15 factors compared between the two stocks.

About Heritage Media

Heritage Media Corporation was formerly known as Lignin Industries Inc. Heritage Media Corporation is based in Calgary, Canada.

About Richardson Electronics

Richardson Electronics, Ltd. engages in the provision of engineered solutions, power grid and microwave tube, and related consumables worldwide. The Power and Microwave Technologies segment manufactures electron tubes and radio frequency (RF), microwave and power components used in semiconductor manufacturing equipment, RF, and wireless and industrial power applications, as well as various applications including broadcast transmission, CO2 laser cutting, diagnostic imaging, dielectric and induction heating, energy transfer, high voltage switching, plasma, power conversion, radar, and radiation oncology. This segment also provides thyratrons and rectifiers, power tubes, ignitrons, magnetrons, phototubes, microwave generators, ultracapacitor modules, and liquid crystal display monitors under the Amperex, Cetron, and National brands. The Green Energy Solutions segment offers design-in support, systems integration, prototype design and manufacturing, testing, logistics and aftermarket, and technical service and repair services for various applications, such as wind, solar, hydrogen, and electric vehicles; and other power management applications that support green solutions including synthetic diamond manufacturing. The Canvys segment provides custom display solutions, which includes touch screens, protective panels, custom enclosures, All-In-One computers, specialized cabinet finishes and application specific software packages, and certification services. The Healthcare segment provides diagnostic imaging replacement parts for CT and MRI systems, replacement CT and MRI tubes, CT service training, MRI and RF amplifiers, hydrogen thyratrons, klystrons, magnetrons, flat panel detector upgrades, pre-owned CT systems, and additional replacement solutions. It serves energy, healthcare, aviation, broadcast, communications, industrial, marine, medical, military, scientific, and semiconductor markets. The company was founded in 1947 and is headquartered in LaFox, Illinois.