Financial Contrast: Canaan (NASDAQ:CAN) vs. Netlist (OTCMKTS:NLST)

Canaan (NASDAQ:CAN) and Netlist (OTCMKTS:NLST) are both small-cap computer and technology companies, but which is the better business? We will compare the two companies based on the strength of their analyst recommendations, institutional ownership, profitability, valuation, risk, dividends and earnings.

Analyst Recommendations

This is a breakdown of recent recommendations for Canaan and Netlist, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Canaan	0	0	2	0	3.00
Netlist	0	0	0	0	N/A

Canaan presently has a consensus target price of $4.25, indicating a potential upside of 308.65%. Given Canaan’s higher probable upside, equities research analysts clearly believe Canaan is more favorable than Netlist.

Valuation and Earnings

This table compares Canaan and Netlist’s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Canaan	$211.48 million	1.38	-$414.15 million	($2.05)	-0.51
Netlist	$69.21 million	4.95	-$60.40 million	($0.25)	-5.36

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

Profitability

This table compares Canaan and Netlist’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Canaan	-192.95%	-75.57%	-57.68%
Netlist	-64.15%	-268.19%	-97.51%

Institutional and Insider Ownership

70.1% of Canaan shares are owned by institutional investors. Comparatively, 0.0% of Netlist shares are owned by institutional investors. 0.3% of Canaan shares are owned by company insiders. Comparatively, 2.7% of Netlist shares are owned 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

Canaan has a beta of 3.11, indicating that its stock price is 211% more volatile than the S&P 500. Comparatively, Netlist has a beta of 1.04, indicating that its stock price is 4% more volatile than the S&P 500.

Summary

Canaan beats Netlist on 8 of the 13 factors compared between the two stocks.

About Canaan

Canaan Inc. engages in the research, design, and sale of integrated circuit (IC) final mining equipment products by integrating IC products for bitcoin mining and related components in the People's Republic of China. It is also involved in the assembly and distribution of mining equipment and spare parts. The company has operations in the United States, Australia, Kazakhstan, Hong Kong, Canada, Mainland China, Thailand, Sweden, and internationally. Canaan Inc. was founded in 2013 and is based in Singapore.

About Netlist

Netlist, Inc. designs, manufactures, and markets memory subsystems for the server, high-performance computing, and communications markets in the United States and internationally. The company portfolio of proprietary technologies and design techniques, includes efficient planar design, alternative packaging techniques, and custom semiconductor logic, to deliver memory subsystems; and sells specialty memory modules and flash-based products for use in data center and industrial applications. It resells component products, including solid state drive (SSD), NAND flash, and dual inline memory module (DIMM) to storage customers, appliance customers, system builders, and cloud and datacenter customers; and sells component inventory to distributors and other users of memory integrated circuits. The company markets and sells its products through a direct sales force and a network of independent sales representatives. Netlist, Inc. was incorporated in 2000 and is headquartered in Irvine, California.