Digital Ally (DGLY) & FLIR Systems (FLIR) Critical Review

FLIR Systems (NASDAQ: FLIR) and Digital Ally (NASDAQ:DGLY) are both aerospace companies, but which is the better investment? We will contrast the two businesses based on the strength of their earnings, profitability, valuation, analyst recommendations, risk, institutional ownership and dividends.

Dividends

FLIR Systems pays an annual dividend of $0.60 per share and has a dividend yield of 1.6%. Digital Ally does not pay a dividend. FLIR Systems pays out 38.5% of its earnings in the form of a dividend.

Risk and Volatility

FLIR Systems has a beta of 0.59, meaning that its share price is 41% less volatile than the S&P 500. Comparatively, Digital Ally has a beta of 3.16, meaning that its share price is 216% more volatile than the S&P 500.

Analyst Ratings

This is a breakdown of recent ratings for FLIR Systems and Digital Ally, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
FLIR Systems 0 3 4 1 2.75
Digital Ally 0 0 2 0 3.00

FLIR Systems currently has a consensus price target of $37.43, suggesting a potential downside of 1.06%. Digital Ally has a consensus price target of $8.50, suggesting a potential upside of 153.73%. Given Digital Ally’s stronger consensus rating and higher possible upside, analysts plainly believe Digital Ally is more favorable than FLIR Systems.

Profitability

This table compares FLIR Systems and Digital Ally’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
FLIR Systems 12.44% 13.97% 9.05%
Digital Ally -72.07% -148.01% -62.85%

Institutional and Insider Ownership

87.4% of FLIR Systems shares are held by institutional investors. Comparatively, 6.6% of Digital Ally shares are held by institutional investors. 3.0% of FLIR Systems shares are held by company insiders. Comparatively, 19.0% of Digital Ally 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.

Earnings & Valuation

This table compares FLIR Systems and Digital Ally’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
FLIR Systems $1.72 billion 3.02 $365.02 million $1.56 24.25
Digital Ally $16.50 million 1.15 -$10.95 million ($2.18) -1.54

FLIR Systems has higher revenue and earnings than Digital Ally. Digital Ally is trading at a lower price-to-earnings ratio than FLIR Systems, indicating that it is currently the more affordable of the two stocks.

Summary

FLIR Systems beats Digital Ally on 11 of the 16 factors compared between the two stocks.

About FLIR Systems

FLIR Systems, Inc. (FLIR) designs, develops, markets and distributes thermal imaging systems, visible-light imaging systems, locater systems, measurement and diagnostic systems and threat-detection solutions. The Company’s segments include Surveillance, Instruments, Security, OEM & Emerging Markets, Maritime and Detection. Its Surveillance segment provides enhanced imaging and recognition solutions. Its Instruments segment provides devices that image, measure and assess thermal energy, gases and other environmental elements for industrial, commercial, and scientific applications under the FLIR and Extech brands. Its OEM & Emerging Markets segment provides thermal imaging camera cores and components. Its Maritime segment develops and manufactures electronics and imaging instruments. Its Security segment develops and manufactures a range of cameras and video recording systems. The Detection segment offers sensors, instruments and integrated platform solutions.

About Digital Ally

Digital Ally, Inc. produces digital video imaging and storage products for use in law enforcement, security and commercial applications. The Company’s products include in-car digital video/audio recorder contained in a rear-view mirror for use in law enforcement and commercial fleets; a system that provides its law enforcement customers with audio/video surveillance from multiple vantage points and hands-free automatic activation of body-worn cameras and in-car video systems; a weather-resistant mobile digital video recording system for use on motorcycles, all-terrain vehicles (ATVs) and boats; a miniature digital video system designed to be worn on an individual’s body, and a hand-held laser speed detection device that it offers primarily to law enforcement agencies. The Company sells its products to law enforcement agencies and other security organizations, consumer and commercial fleet operators through direct sales domestically and third-party distributors internationally.

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