Semtech (NASDAQ:SMTC) versus AXT (NASDAQ:AXTI) Financial Contrast

AXT (NASDAQ:AXTI) and Semtech (NASDAQ:SMTC) are both technology companies, but which is the better investment? We will compare the two companies based on the strength of their institutional ownership, earnings, valuation, dividends, profitability, risk and analyst recommendations.

Profitability

This table compares AXT and Semtech’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
AXT	3.23%	0.96%	0.70%
Semtech	13.11%	21.74%	8.98%

Risk and Volatility

AXT has a beta of 1.86, indicating that its share price is 86% more volatile than the S&P 500. Comparatively, Semtech has a beta of 2.41, indicating that its share price is 141% more volatile than the S&P 500.

Institutional and Insider Ownership

49.5% of AXT shares are owned by institutional investors. 6.0% of AXT shares are owned by insiders. Comparatively, 0.4% of Semtech shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Valuation & Earnings

This table compares AXT and Semtech”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
AXT	$88.33 million	53.20	-$21.26 million	$0.02	3,583.00
Semtech	$1.05 billion	16.67	-$40.38 million	$1.51	124.17

AXT has higher earnings, but lower revenue than Semtech. Semtech is trading at a lower price-to-earnings ratio than AXT, indicating that it is currently the more affordable of the two stocks.

Analyst Recommendations

This is a summary of current recommendations for AXT and Semtech, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
AXT	1	2	3	0	2.33
Semtech	0	3	15	1	2.89

AXT currently has a consensus price target of $77.00, suggesting a potential upside of 7.45%. Semtech has a consensus price target of $208.06, suggesting a potential upside of 10.97%. Given Semtech’s stronger consensus rating and higher probable upside, analysts plainly believe Semtech is more favorable than AXT.

Summary

Semtech beats AXT on 10 of the 15 factors compared between the two stocks.

About AXT

AXT, Inc. designs, develops, manufactures, and distributes compound and single element semiconductor substrates. The company offers indium phosphide for use in data center connectivity using light/lasers, high-speed data transfer in data centers, 5G communications, fiber optic lasers and detectors, consumer devices, passive optical networks, silicon photonics, photonic integrated circuits, thermo-photovoltaics, RF amplifier and switching, infrared light-emitting diode (LEDS) motion control, lidar for robotics and autonomous vehicles, and infrared thermal imaging. It also provides semi-insulating gallium arsenide (GaAs) substrates for use in Wi-Fi and IoT devices, transistors, direct broadcast television, power amplifiers, satellite communications, and solar cells; and semi-conducting GaAs substrates that are used in LEDs, screen displays using micro-LEDs, printer head lasers and LEDs, 3-D sensing using VCSELs, data center communication using VCSELs, sensors for industrial robotics/near-infrared sensors, optical couplers, solar cells, night vision goggles, lidar for robotics and autonomous vehicles, and other lasers, as well as laser machining, cutting, and drilling. In addition, the company offers germanium substrates for use in multi-junction solar cells for satellites, optical sensors and detectors, terrestrial concentrated photo voltaic cells, infrared detectors, and carrier wafer for LED. Further, it provides 6N+ and 7N+ purified gallium, boron trioxide, gallium-magnesium alloy, pyrolytic boron nitride (pBN) crucibles, and pBN insulating parts. It sells its products through direct salesforce in the United States, China, and Europe, as well as through independent sales representatives and distributors in Japan, Taiwan, Korea, and internationally. The company was formerly known as American Xtal Technology, Inc. and changed its name to AXT, Inc. in July 2000. AXT, Inc. was incorporated in 1986 and is headquartered in Fremont, California.

About Semtech

Semtech Corporation designs, develops, manufactures, and markets analog and mixed-signal semiconductor and advanced algorithms. It provides signal integrity products, including a portfolio of optical data communications and video transport products used in various infrastructure, and industrial applications; a portfolio of integrated circuits for data centers, enterprise networks, passive optical networks, wireless base station optical transceivers, and high-speed interface applications; and video products for broadcast applications, as well as video-over-IP technology for professional audio video applications. The company offers protection products, such as filter and termination devices that are integrated with the transient voltage suppressor devices, which protect electronic systems from voltage spikes; and sensing products comprising a portfolio of specialized radio frequency products used in various industrial, medical, and communications applications, as well as specialized sensing products. In addition, it provides switching voltage regulators, combination switching and linear regulators, smart regulators, isolated switches, and wireless charging related products. Further, it offers portfolio of IoT solutions, such as modules, gateways, routers, and connected services; and portfolio of connected services, including wireless connectivity and cloud-based services for industrial, medical and communications applications. The company serves original equipment manufacturers and industrial end-markets. It sells its products directly, as well as through independent sales representative firms and independent distributors in Asia- Pacific, North America, and Europe. Semtech Corporation was incorporated in 1960 and is headquartered in Camarillo, California.