Introduction
This treatise carries out an analysis of shares of Koss Corporation and Harman International Industries Incorporated. Both companies operate in the audio/video industry. It is a segment of home entertainment industry. Specifically, the companies produce and sales stereo headphones (Hoover’s Inc. 2013). They sell a wide range of high quality “stereo headphones, speaker-phones, computer headsets, telecommunications headsets, active noise canceling stereo headphones, wireless stereo headphones, and compact disc recordings of American Symphony Orchestras under the Koss Classics label” (ABC News Network 2013a). The companies sell their products both in the US market and other foreign markets. The foreign markets include Europe, Middle East, Latin America, Canada, and Mexico among others. The large amount of net sales emanates from the US market. Harman International Industries Incorporated is larger in size than Koss Corporation.
Share prices and dividends
The table below summarizes the monthly share prices and dividends paid by Koss Corporation from January 2012 to February 2013.
From the share prices shown in the table above, share prices for Koss Corporation were fairly stable. It ranged between $4.68 and $5.41 for the past one year. It shows that the prices for the company ranged by a small margin of $0.73. Further, the company paid a total annual dividend amounting to $0.24 paid quarterly. The table below summarizes the monthly share prices and dividends paid by Harman International Industries Incorporated from January 2012 to February 2013.
The shares of Harman International Industries Incorporated are trading at a higher price than those of Koss Corporation. The shares had a larger range than those of Koss Corporation. The highest share price was $48.99 while the lowest was $37.53. This creates a margin of $11.46. Further, the amount of dividend paid by Harman International Industries Incorporated ($0.6) was higher than that of Koss Corporation (0.24) by $0.36. From the above comparison, it is evident that the shares of Harman International Industries Incorporated are performing better than those of Koss Corporation. The graph below shows the daily share prices for the two companies for the past one year.
From the graph, share prices for Koss Corporation were fairly stable during that period while the prices for Harman International Industries Incorporated had some variations.
Profitability of the two companies
The table below summarizes the financial results for both companies for the past one year.
From the summary above, the total number of employees at the Koss Corporation is 60 while at Harman International Industries Incorporated the total number of employees is 11,366. This comparison indicates that Harman International Industries Incorporated is larger in size than Koss Corporation. The total revenue for Koss Corporation amounted to $36.68 million while revenue for Harman International Industries Incorporated totaled to $4.24 billion. EBITDA for Koss Corporation amounted to $1.88m while for Harman International Industries Incorporated totaled to $405.04 million. Similarly, net income for Harman International Industries Incorporated ($323.96 million) is greater than net income for Koss Corporation ($2.53 million). It is evident that the financial performance of Harman International Industries Incorporated is better than that of Koss Corporation in absolute terms. However, financial results for both companies is less than the industry average as indicated by EBITDA.
In terms of percentages, the results are contrary. For instance, the gross profit margin for Koss Corporation (37%) is greater than the gross profit margin for Harman International Industries Incorporated (27%) by 10%. However, the operating profit margin for Koss Corporation (3%) is lower than that of Harman International Industries Incorporated (7%). This implies that the management of Koss Corporation is in a position to manage pricing and cost of sales decisions so as to generate high gross profit but is not in a position to manage the cost of operations so as to generate higher values or EBITDA.
It is worth mentioning that the profitability of a company has a direct effect on the market share prices of the company. For instance, the earnings per share for for Koss Corporation was 0.34 while that of Harman International Industries Incorporated was 4.58. This implies that the earning attributable to shareholders of Harman International Industries Incorporated was higher than shareholders of Koss Corporation. Further, the earnings per share for Harman International Industries Incorporated was higher than the industry average which is 0.39. Further, the price earnings ratios for Koss Corporation (14.53) was higher than that of Harman International Industries Incorporated which has a ratio of 9.49. Values for both companies were lower than the industry average which was at 16.12. Further, price to sales ratio for Koss Corporation (1.01) was higher than the ratio for Harman International Industries Incorporated (0.69). The industry average for price to sales ratio was 0.77. This shows that the price to sales ratio for the Koss Corporation is higher than industry average. Finally market capitalization for Harman International Industries Incorporated ($2.95 billion) was higher than that of Koss Corporation ($36.91 million). In addition, it was higher than the industry average which was $1.01 billion (Morningstar 2013).
Conclusion
From the above comparison, it is clear that the share price Harman International Industries Incorporated is higher than the share price for Koss Corporation. Besides, shares of Koss Corporation are fairly stable. This could be an indication that there is no growth in the company. Further, Harman International Industries Incorporated pays higher dividends than Koss Corporation. Earning per share for the Koss Corporation is higher than for Harman International Industries Incorporated while the price earnings ratio for Harman International Industries Incorporated is higher than that of Koss Corporation. A potential investor should invest in the shares for Harman International Industries Incorporated since the company shows potential for and higher dividends. Koss Corporation seems to have reached maturity stage and there is no potential for future growth (Eugene and Joel 2009).
Reference list
ABC News Network 2013a, Koss Corporation, Web.
ABC News Network 2013b, Harman International Industries Inc., Web.
Eugene, B and Joel, M 2009, Financial management theory and practice, South-Western Cengage Learning, USA.
Hoover’s Inc. 2013, Koss Corporation company information, Web.
Morningstar 2013, Harman International Industries Inc., Web.