Critical Analysis: Ambarella (NASDAQ:AMBA) vs. IQE (OTCMKTS:IQEPF)

IQE (OTCMKTS:IQEPF) and Ambarella (NASDAQ:AMBA) 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, risk, profitability, institutional ownership, dividends, earnings and analyst recommendations.

Analyst Recommendations

This is a summary of current ratings for IQE and Ambarella, as reported by MarketBeat.com.

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

Ambarella has a consensus target price of $96.00, indicating a potential upside of 38.63%. Given Ambarella’s stronger consensus rating and higher probable upside, analysts clearly believe Ambarella is more favorable than IQE.

Risk and Volatility

IQE has a beta of 1.5, meaning that its share price is 50% more volatile than the S&P 500. Comparatively, Ambarella has a beta of 1.95, meaning that its share price is 95% more volatile than the S&P 500.

Profitability

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

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

Insider and Institutional Ownership

82.1% of Ambarella shares are held by institutional investors. 5.3% of Ambarella shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company is poised for long-term growth.

Earnings & Valuation

This table compares IQE and Ambarella”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
IQE	$150.84 million	0.66	-$48.79 million	N/A	N/A
Ambarella	$284.86 million	10.47	-$117.13 million	($1.88)	-36.84

IQE has higher earnings, but lower revenue than Ambarella.

Summary

Ambarella beats IQE on 9 of the 13 factors compared between the two stocks.

About IQE

IQE plc, together with its subsidiaries, develops, manufactures, and sells advanced semiconductor materials. It operates through three segments: Wireless, Photonics, and CMOS++. The company manufactures and sells compound semiconductor materials for the wireless market which includes radio frequency devices for wireless communications, and photonics market, that includes applications that transmit and sense visible and infrared lights, as well as advanced semiconductor materials related to silicon. It operates in the United States, rest of the Americas, France, Germany, Israel, the United Kingdom, rest of Europe, the Middle East, Africa, the People's Republic of China, Japan, Taiwan, and rest of the Asia-Pacific. The company was founded in 1988 and is headquartered in Cardiff, the United Kingdom.

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.