Critical Review: United Microelectronics (UMC) & NVIDIA (NVDA)
United Microelectronics (NYSE: UMC) and NVIDIA (NASDAQ:NVDA) are both computer and technology companies, but which is the superior stock? We will contrast the two businesses based on the strength of their valuation, earnings, institutional ownership, profitability, risk, dividends and analyst recommendations.
This table compares United Microelectronics and NVIDIA’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
5.7% of United Microelectronics shares are owned by institutional investors. Comparatively, 61.5% of NVIDIA shares are owned by institutional investors. 8.0% of United Microelectronics shares are owned by company insiders. Comparatively, 5.8% of NVIDIA shares are owned 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 United Microelectronics and NVIDIA’s top-line revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|United Microelectronics||$5.01 billion||1.18||$323.00 million||$0.13||18.62|
|NVIDIA||$9.71 billion||14.73||$3.05 billion||$4.61||51.31|
NVIDIA has higher revenue and earnings than United Microelectronics. United Microelectronics is trading at a lower price-to-earnings ratio than NVIDIA, indicating that it is currently the more affordable of the two stocks.
United Microelectronics pays an annual dividend of $0.06 per share and has a dividend yield of 2.5%. NVIDIA pays an annual dividend of $0.60 per share and has a dividend yield of 0.3%. United Microelectronics pays out 46.2% of its earnings in the form of a dividend. NVIDIA pays out 13.0% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years.
This is a summary of current ratings and recommmendations for United Microelectronics and NVIDIA, as reported by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
United Microelectronics currently has a consensus target price of $2.10, suggesting a potential downside of 13.22%. NVIDIA has a consensus target price of $209.00, suggesting a potential downside of 11.64%. Given NVIDIA’s stronger consensus rating and higher possible upside, analysts clearly believe NVIDIA is more favorable than United Microelectronics.
Volatility & Risk
United Microelectronics has a beta of 0.59, suggesting that its share price is 41% less volatile than the S&P 500. Comparatively, NVIDIA has a beta of 1.43, suggesting that its share price is 43% more volatile than the S&P 500.
NVIDIA beats United Microelectronics on 14 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.
Nvidia Corporation focuses on personal computer (PC) graphics, graphics processing unit (GPU) and also on artificial intelligence (AI). The Company’s operates through two segments: GPU and Tegra Processor. The Company’s GPU product brands are aimed at specialized markets, including GeForce for gamers; Quadro for designers; Tesla and DGX for AI data scientists and big data researchers; and GRID for cloud-based visual computing users. The Company’s Tegra brand integrates an entire computer onto a single chip, and incorporates GPUs and multi-core central processing units (CPUs) to drive supercomputing for mobile gaming and entertainment devices, as well as autonomous robots, drones and cars. The Company’s processor has created platforms that address four markets: Gaming, Professional Visualization, Datacenter, and Automotive. The Company’s offerings include NVIDIA DGX AI supercomputer, the NVIDIA DRIVE AI car computing platform and the GeForce NOW cloud gaming service.
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