Contrasting NeoMagic (OTCMKTS:NMGC) & Ambarella (NASDAQ:AMBA)

NeoMagic (OTCMKTS:NMGC) and Ambarella (NASDAQ:AMBA) are both computer and technology companies, but which is the better investment? We will contrast the two companies based on the strength of their valuation, analyst recommendations, profitability, dividends, earnings, risk and institutional ownership.

Profitability

This table compares NeoMagic and Ambarella’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
NeoMagic	N/A	N/A	N/A
Ambarella	-21.31%	-13.02%	-10.52%

Valuation and Earnings

This table compares NeoMagic and Ambarella”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
NeoMagic	N/A	N/A	N/A	N/A	N/A
Ambarella	$284.86 million	11.65	-$117.13 million	($1.88)	-41.02

NeoMagic has higher earnings, but lower revenue than Ambarella.

Institutional and Insider Ownership

82.1% of Ambarella shares are owned by institutional investors. 12.7% of NeoMagic shares are owned by company insiders. Comparatively, 5.7% of Ambarella shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.

Risk & Volatility

NeoMagic has a beta of 0.15, meaning that its stock price is 85% less volatile than the S&P 500. Comparatively, Ambarella has a beta of 1.95, meaning that its stock price is 95% more volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of current ratings for NeoMagic and Ambarella, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
NeoMagic	0	0	0	0	0.00
Ambarella	1	4	7	2	2.71

Ambarella has a consensus price target of $96.00, indicating a potential upside of 24.50%. Given Ambarella’s stronger consensus rating and higher probable upside, analysts plainly believe Ambarella is more favorable than NeoMagic.

Summary

Ambarella beats NeoMagic on 7 of the 11 factors compared between the two stocks.

About NeoMagic

NeoMagic Corporation designs and delivers semiconductors and software solutions for video, television, imaging, graphic, and audio devices. It offers microcontrollers; horizon digital picture frame and digital mobile TV solutions; and SOC processors, such as application processors and Neomobile TV solutions. The company, through its MercadoMagico.com division, operates an e-Commerce platform that allows user to buy and sell products from one another or buy premium electronic products. It sells its applications processors under the MiMagic brand name. The company was founded in 1993 and is based in Milpitas, California.

About Ambarella

Ambarella, Inc. develops semiconductor solutions that enable high-definition (HD) and ultra HD compression, image signal processing, and artificial intelligence processing worldwide. The company's system-on-a-chip designs integrated HD video processing, image processing, artificial intelligence computer vision algorithms, audio processing, and system functions onto a single chip for delivering video and image quality, differentiated functionality, and low power consumption. Its solutions are used in automotive cameras, such as automotive video recorders, electronic mirrors, front advanced driver assistance system camera, cabin monitoring system and driver monitoring system camera, and central domain controllers for autonomous vehicle; enterprise and public class, and home security camera; and robotics and industrial application, including identification/authentication cameras, robotic products, and sensing cameras, as well as cameras for the enterprise, home, public spaces, and consumer leisure comprising wearable body cameras, sports action cameras, social media cameras, drones for capturing aerial video or photographs, video conferencing, and virtual reality applications. The company sells its solutions to original design manufacturers and original equipment manufacturers through its direct sales force and distributors. Ambarella, Inc. was incorporated in 2004 and is headquartered in Santa Clara, California.