Introduction
This treatise carries out a technical 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 2013b). 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.
Profitability of the companies
The table below summarizes the financial results for both companies for the past one year.
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 are 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%). The profitability of a company has a direct effect on the market share prices of the company
Share prices and dividends
The 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 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 range 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 (Morningstar 2013). The share prices for Koss Corporation were fairly stable during that period while the prices for Harman International Industries Incorporated had some variations.
Moving averages
The moving averages show the strength of the share prices in the long run. A 10 days moving average give better indication than 5 days moving average. The graph below shows the trend of the moving averages, the daily stock prices for the two companies.
Koss Corporation
Harman International Industries Incorporated
From the charts above shows that the share prices of the two companies are stable since the moving averages tend to follow the same trend as the daily share prices. However, there are some outliers in charts for both companies. This is a common characteristic for random variables. Thus, a moving average a key tool for smoothing the share prices so as to determine long term stability. A long term moving average gives smoother curves than short term averages (Collier 2009).
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. Finally, based on the moving averages, the share prices of both companies are fairly stable. 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 (Collier 2009).
References
ABC News Network 2013a, Harman International Industries Inc., Web.
ABC News Network 2013b, Koss Corporation, Web.
Collier, P 2009, Accounting for managers, John Wiley & Sons Ltd, London.
Hoover’s Inc. 2013, Koss Corporation company information, Web.
Morningstar 2013, Harman International Industries Inc., Web.