Semtech (NASDAQ:SMTC) and Smart Global (NASDAQ:SGH) are both computer and technology companies, but which is the superior business? We will contrast the two businesses based on the strength of their risk, dividends, earnings, valuation, institutional ownership, profitability and analyst recommendations.

Analyst Ratings

This is a breakdown of recent recommendations and price targets for Semtech and Smart Global, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Semtech 0 3 8 0 2.73
Smart Global 0 1 4 0 2.80

Semtech presently has a consensus price target of $48.45, indicating a potential downside of 3.78%. Smart Global has a consensus price target of $40.20, indicating a potential upside of 21.73%. Given Smart Global’s stronger consensus rating and higher probable upside, analysts plainly believe Smart Global is more favorable than Semtech.

Profitability

This table compares Semtech and Smart Global’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Semtech 8.71% 10.64% 6.96%
Smart Global 1.89% 13.14% 4.65%

Risk & Volatility

Semtech has a beta of 1.93, suggesting that its stock price is 93% more volatile than the S&P 500. Comparatively, Smart Global has a beta of 1.33, suggesting that its stock price is 33% more volatile than the S&P 500.

Valuation & Earnings

This table compares Semtech and Smart Global’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Semtech $627.20 million 5.32 $63.06 million $1.33 37.86
Smart Global $1.21 billion 0.65 $51.33 million $2.56 12.90

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

Insider & Institutional Ownership

94.4% of Semtech shares are owned by institutional investors. Comparatively, 92.5% of Smart Global shares are owned by institutional investors. 2.0% of Semtech shares are owned by company insiders. Comparatively, 4.1% of Smart Global shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Summary

Semtech beats Smart Global on 8 of the 14 factors compared between the two stocks.

Semtech Company Profile

Semtech Corporation designs, develops, manufactures, and markets analog and mixed-signal semiconductor products and advanced algorithms. The company provides signal integrity products, including a portfolio of optical data communications and video transport products used in various enterprise computing, industrial, and communications applications; a portfolio of integrated circuits for data centers, enterprise networks, passive optical networks, wireless base station optical transceivers, and high-speed interface applications; and video products for broadcast applications, as well as video-over-IP technology for professional audio video applications. It also offers protection products, such as filter and termination devices that are integrated with the transient voltage suppressor devices, which protect electronic systems from voltage spikes; and wireless and sensing products comprising a portfolio of specialized radio frequency products used in various industrial, medical, and communications applications, as well as specialized sensing products used in industrial and consumer applications. In addition, the company provides power products consisting of switching voltage regulators, combination switching and linear regulators, smart regulators, isolated switches, and wireless charging that control, alter, regulate, and condition the power within electronic systems. It serves original equipment manufacturers and their suppliers in the enterprise computing, communications, and consumer and industrial end-markets. The company sells its products directly, as well as through independent sales representative firms and independent distributors in the United States, Europe, and Asia. Semtech Corporation was founded in 1960 and is headquartered in Camarillo, California.

Smart Global Company Profile

SMART Global Holdings, Inc. designs, manufactures, and supplies specialty memory solutions worldwide. The company offers dynamic random access memory (DRAM) components, which are used to manufacture modules and other products; DRAM modules for desktop, notebook, and server applications, as well as for use in smartphones; and specialty DRAM modules for industrial, communications, and networking applications, as well as develops specialized memory module designs based on original equipment manufacturer (OEM) requirements. It also provides flash memory, USB, and serial advanced technology attachment products primarily for use in communications equipment, printers, servers and storage products, switches, and routers; and aerospace, automotive, and defense industries, as well as industrial applications. In addition, the company provides networking, storage, and compute solutions, as well as HPC software to manage and use on premise and cloud computing clusters. Further, it offers supply chain services, including procurement, logistics, inventory management, temporary warehousing, programming, kitting, and packaging. SMART Global Holdings, Inc. sells its products to OEMs through direct sales force and independent sales representatives in North America, Latin America, Asia, and Europe. The company was formerly known as Saleen Holdings, Inc. and changed its name to SMART Global Holdings, Inc. in August 2014. SMART Global Holdings, Inc. was founded in 1988 and is headquartered in Newark, California.

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