Critical Analysis: Cree (CREE) versus Silicon Motion Technology (SIMO)
Cree (NASDAQ:CREE) and Silicon Motion Technology (NASDAQ:SIMO) are both computer and technology companies, but which is the superior investment? We will contrast the two businesses based on the strength of their analyst recommendations, institutional ownership, profitability, valuation, dividends, earnings and risk.
Volatility and Risk
Cree has a beta of 0.44, suggesting that its stock price is 56% less volatile than the S&P 500. Comparatively, Silicon Motion Technology has a beta of 0.95, suggesting that its stock price is 5% less volatile than the S&P 500.
This is a summary of recent ratings and price targets for Cree and Silicon Motion Technology, as reported by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Silicon Motion Technology||1||3||10||0||2.64|
Cree currently has a consensus price target of $46.36, indicating a potential upside of 10.88%. Silicon Motion Technology has a consensus price target of $56.25, indicating a potential upside of 75.07%. Given Silicon Motion Technology’s stronger consensus rating and higher probable upside, analysts plainly believe Silicon Motion Technology is more favorable than Cree.
Institutional & Insider Ownership
74.0% of Silicon Motion Technology shares are owned by institutional investors. 0.6% of Cree shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.
Silicon Motion Technology pays an annual dividend of $1.19 per share and has a dividend yield of 3.7%. Cree does not pay a dividend. Silicon Motion Technology pays out 56.9% of its earnings in the form of a dividend. Silicon Motion Technology has raised its dividend for 2 consecutive years.
Earnings & Valuation
This table compares Cree and Silicon Motion Technology’s top-line revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|Cree||$1.49 billion||2.87||-$279.96 million||($0.15)||-278.73|
|Silicon Motion Technology||$523.40 million||2.22||$74.95 million||$2.09||15.37|
Silicon Motion Technology has lower revenue, but higher earnings than Cree. Cree is trading at a lower price-to-earnings ratio than Silicon Motion Technology, indicating that it is currently the more affordable of the two stocks.
This table compares Cree and Silicon Motion Technology’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Silicon Motion Technology||17.10%||17.92%||13.97%|
Silicon Motion Technology beats Cree on 13 of the 17 factors compared between the two stocks.
Cree, Inc. provides lighting-class light emitting diode (LED), lighting, and semiconductor products for power and radio-frequency (RF) applications in the United States, China, Europe, South Korea, Japan, Malaysia, Taiwan, and internationally. It operates in three segments: Wolfspeed, LED Products, and Lighting Products. The Wolfspeed segment offers silicon carbide (SiC) materials for RF, power switching, gemstones, and other applications. It also provides SiC power device products, including SiC Schottky diodes, metal oxide semiconductor field effect transistors (MOSFETs), power modules, and gate driver boards for electric vehicles, including charging infrastructure, server power supplies, solar inverters, uninterruptible power supplies, industrial power supplies, and other applications. In addition, this segment offers gallium nitride (GaN) die, high-electron mobility transistors (HEMTs), monolithic microwave integrated circuits (MMICs), and laterally diffused MOSFET (LDMOS) power transistors for telecommunications infrastructure, military, and other commercial applications; and custom die manufacturing services for GaN HEMTs and MMICs. The LED Products segment provides blue and green LED chip products for video screens, gaming displays, function indicator lights and automotive backlights, headlamps, and directional indicators. It also offers XLamp LED components and LED modules for lighting applications; and surface mount and through-hole packaged LED products for video, signage, general illumination, transportation, gaming, and specialty lighting applications. The Lighting Products segment offers LED lighting systems and lamps for to distributors, retailers, and customers for offices, retail spaces, restaurants, hospitality, schools, universities, manufacturing, healthcare, airports, municipal, residential, street lighting, parking structures, and other applications. The company was founded in 1987 and is headquartered in Durham, North Carolina.
About Silicon Motion Technology
Silicon Motion Technology Corporation, together with its subsidiaries, designs, develops, and markets semiconductor solutions for the mobile and enterprise storage, and mobile communications markets worldwide. It offers embedded storage and expandable storage products, including NAND flash controllers, such as embedded multimediacard (eMMC), universal flash storage, client solid-state drive (SSD), secure digital card, flash memory card controller, and universal serial bus flash drive controller products. The company also provides specialty storage solutions, such as customized enterprise-grade peripheral component interconnect express SSDs; and industrial-grade and commercial-grade single-chip SSDs. In addition, it offers specialty radio frequency integrated circuits (RF ICs), such as mobile TV system-on-chips (SoCs) and low power WiFi SoCs. The company's products are used in smartphones, tablets, digital cameras, camcorders, and desktop and notebook PCs, as well as in industrial, enterprise, commercial, and other applications. It offers its controllers under the SMI brand; enterprise-grade SSDs under the Shannon brand; single-chip industrial-grade SSDs under the Ferri SSD and Ferri-eMMC brands; RF ICs under the FCI brand; and software-defined storage products under the Bigtera brand. The company markets and sells its products through direct sales personnel and independent electronics distributors to flash manufacturers, original equipment manufacturers, and module makers. Silicon Motion Technology Corporation was founded in 1995 and is based in Kowloon, Hong Kong.
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