Lantronix (LTRX) versus Alcatel Lucent (ALU) Critical Analysis

Alcatel Lucent (NYSE: ALU) and Lantronix (NASDAQ:LTRX) are both technology companies, but which is the better investment? We will compare the two companies based on the strength of their valuation, institutional ownership, profitability, earnings, dividends, risk and analyst recommendations.

Profitability

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This table compares Alcatel Lucent and Lantronix’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Alcatel Lucent 14.83% 86.14% 10.96%
Lantronix -1.42% 3.84% 2.64%

Analyst Recommendations

This is a breakdown of recent recommendations and price targets for Alcatel Lucent and Lantronix, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Alcatel Lucent 0 0 0 0 N/A
Lantronix 0 0 1 0 3.00

Lantronix has a consensus target price of $4.00, indicating a potential upside of 81.00%. Given Lantronix’s higher probable upside, analysts clearly believe Lantronix is more favorable than Alcatel Lucent.

Institutional & Insider Ownership

15.2% of Lantronix shares are held by institutional investors. 52.4% of Lantronix shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company will outperform the market over the long term.

Valuation and Earnings

This table compares Alcatel Lucent and Lantronix’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Alcatel Lucent N/A N/A N/A $0.08 43.25
Lantronix $44.73 million 0.90 -$270,000.00 ($0.04) -55.25

Alcatel Lucent has higher earnings, but lower revenue than Lantronix. Lantronix is trading at a lower price-to-earnings ratio than Alcatel Lucent, indicating that it is currently the more affordable of the two stocks.

Volatility & Risk

Alcatel Lucent has a beta of 2.05, indicating that its share price is 105% more volatile than the S&P 500. Comparatively, Lantronix has a beta of -0.18, indicating that its share price is 118% less volatile than the S&P 500.

Summary

Alcatel Lucent beats Lantronix on 6 of the 11 factors compared between the two stocks.

Alcatel Lucent Company Profile

Alcatel Lucent SA is a provider of Internet protocol (IP) networking, ultra-broadband access and cloud technology solutions. The Company operates through two segments for the networks business. The Ultra Broadband Networks segment consists of Mobile Networks and Fixed Networks business groups. The IP Networks and Applications segment consists of Internet protocol (IP)/Optical Networks and Applications and Analytics business groups. Its other segment consists of businesses run as separate operations (Alcatel Submarine Networks and Radio Frequency Systems (RFS)). The Company offers a range of solutions, including Communications and collaboration, IP Core Routing, IP/optical integration, long term evolution (LTE) Ultra-Broadband, Software-defined networking and Vplus. The Company offers a range of consulting, managed, maintenance and professional services, including Bell Labs Consulting and Build, Operate and Manage (BOM) Solution for Mobility Networks. The main shareholder is Nokia.

Lantronix Company Profile

Lantronix, Inc. is a provider of secure data access and management solutions for Internet of things (IoT) and information technology (IT) assets. The Company organizes its products and solutions into three product lines, including IoT, IT Management and Other. Its IoT products consist of IoT Gateways and IoT Building Blocks. The Company’s IT Management product line includes console management, power management and keyboard video mouse (KVM), products that provide remote out-of-band management (OOBM) access to IT and networking infrastructure deployed in test labs, data centers and server rooms. Its Other product line includes non-focus products, such as the xPrintServer, xSenso and WiBox. Its connectivity solutions serves a range of industries, including data center, medical, security, environmental and government. The Company conducts its business in approximately three geographic regions, including the Americas; Europe, Middle East and Africa (EMEA), and Asia Pacific Japan (APJ).

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