United Microelectronics (NYSE: UMC) and Analog Devices (NASDAQ:ADI) are both mid-cap technology companies, but which is the superior business? We will compare the two businesses based on the strength of their earnings, analyst recommendations, risk, institutional ownership, valuation, dividends and profitability.

Institutional & Insider Ownership

5.8% of United Microelectronics shares are owned by institutional investors. Comparatively, 87.3% of Analog Devices shares are owned by institutional investors. 8.0% of United Microelectronics shares are owned by company insiders. Comparatively, 1.1% of Analog Devices shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock will outperform the market over the long term.

Risk & Volatility

United Microelectronics has a beta of 0.57, suggesting that its stock price is 43% less volatile than the S&P 500. Comparatively, Analog Devices has a beta of 1.3, suggesting that its stock price is 30% more volatile than the S&P 500.

Analyst Ratings

This is a breakdown of recent recommendations for United Microelectronics and Analog Devices, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
United Microelectronics 8 0 0 0 1.00
Analog Devices 0 8 17 0 2.68

United Microelectronics currently has a consensus target price of $2.10, indicating a potential downside of 18.60%. Analog Devices has a consensus target price of $96.55, indicating a potential upside of 13.05%. Given Analog Devices’ stronger consensus rating and higher probable upside, analysts clearly believe Analog Devices is more favorable than United Microelectronics.

Profitability

This table compares United Microelectronics and Analog Devices’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
United Microelectronics 6.90% 4.84% 2.71%
Analog Devices 14.22% 18.78% 8.40%

Dividends

United Microelectronics pays an annual dividend of $0.06 per share and has a dividend yield of 2.3%. Analog Devices pays an annual dividend of $1.80 per share and has a dividend yield of 2.1%. United Microelectronics pays out 46.2% of its earnings in the form of a dividend. Analog Devices pays out 87.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. United Microelectronics is clearly the better dividend stock, given its higher yield and lower payout ratio.

Earnings and Valuation

This table compares United Microelectronics and Analog Devices’ revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
United Microelectronics $4.59 billion 1.38 $266.08 million $0.13 19.85
Analog Devices $5.11 billion 6.16 $727.25 million $2.07 41.26

Analog Devices has higher revenue and earnings than United Microelectronics. United Microelectronics is trading at a lower price-to-earnings ratio than Analog Devices, indicating that it is currently the more affordable of the two stocks.

Summary

Analog Devices beats United Microelectronics on 13 of the 16 factors compared between the two stocks.

About United Microelectronics

United Microelectronics Corporation is a global semiconductor foundry. The Company provides integrated circuit (IC) production for applications spanning every sector of the electronics industry. The Company operates through two segments: wafer fabrication and new business. The primary operating activity of the Company’s wafer fabrication segment is the manufacture of chips to the design specifications of its customers by using its own processes and techniques. The new business segment primarily includes researching, developing, manufacturing, and providing solar energy and new generation light-emitting diode (LED). The Company maintains a customer base across various industries, including communication, consumer electronics, computer, memory and others, while focusing on manufacturing for applications, including networking, telecommunications, Internet, multimedia, personal computers (PCs) and graphics.

About Analog Devices

Analog Devices, Inc. (Analog Devices) designs, manufactures and markets a portfolio of solutions that leverage high-performance analog, mixed-signal and digital signal processing technology, including integrated circuits (ICs), algorithms, software and subsystems. Its products include Analog Products, Converters, Amplifiers/Radio Frequency, Other Analog, Power Management and Reference, and Digital Signal Processing Products. The Company is a supplier of data converter products. The Company is a supplier of high-performance amplifiers. Its analog product line also includes products of high performance radio frequency (RF) ICs. The Company’s DSPs are used for high-speed numeric calculations. The Company offers its products for applications in various end markets, such as industrial, automotive, consumer and communications. The Company operates in the United States, Rest of North/South America, Europe, Japan and China.

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