Critical Survey: Rambus (NASDAQ:RMBS) vs. Aehr Test Systems (NASDAQ:AEHR)

Rambus (NASDAQ:RMBS) and Aehr Test Systems (NASDAQ:AEHR) are both mid-cap technology companies, but which is the superior business? We will compare the two companies based on the strength of their earnings, valuation, analyst recommendations, risk, dividends, profitability and institutional ownership.

Risk and Volatility

Rambus has a beta of 1.93, indicating that its stock price is 93% more volatile than the S&P 500. Comparatively, Aehr Test Systems has a beta of 3.36, indicating that its stock price is 236% more volatile than the S&P 500.

Analyst Recommendations

This is a summary of current recommendations for Rambus and Aehr Test Systems, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Rambus	0	3	6	1	2.80
Aehr Test Systems	1	1	5	1	2.75

Rambus currently has a consensus price target of $147.00, indicating a potential upside of 69.96%. Aehr Test Systems has a consensus price target of $118.75, indicating a potential upside of 75.70%. Given Aehr Test Systems’ higher possible upside, analysts plainly believe Aehr Test Systems is more favorable than Rambus.

Valuation and Earnings

This table compares Rambus and Aehr Test Systems”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Rambus	$707.63 million	13.09	$230.46 million	$2.43	35.59
Aehr Test Systems	$50.00 million	44.32	-$7.13 million	($0.24)	-281.61

Rambus has higher revenue and earnings than Aehr Test Systems. Aehr Test Systems is trading at a lower price-to-earnings ratio than Rambus, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Rambus and Aehr Test Systems’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Rambus	33.40%	19.43%	17.59%
Aehr Test Systems	2.97%	1.76%	1.54%

Insider and Institutional Ownership

88.5% of Rambus shares are held by institutional investors. Comparatively, 69.7% of Aehr Test Systems shares are held by institutional investors. 0.7% of Rambus shares are held by company insiders. Comparatively, 4.6% of Aehr Test Systems shares are held by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company will outperform the market over the long term.

Summary

Rambus beats Aehr Test Systems on 9 of the 14 factors compared between the two stocks.

About Rambus

Rambus Inc. develops semiconductor technology used to move and protect data in electronic systems. Its business includes memory-interface chips and silicon intellectual property licensed to semiconductor manufacturers and other technology companies. The company’s products include memory interface components for advanced memory systems, such as registered clock drivers and data buffers, as well as security technologies for applications including cryptography and hardware-based protection. These solutions serve markets such as data centers, computing, and consumer electronics.

About Aehr Test Systems

Aehr Test Systems designs, manufactures and markets semiconductor test and burn-in equipment and related products. Its systems are used to test devices at the wafer, die and packaged-chip stages of production. The company’s offerings include FOX series test and burn-in systems, WaferPak wafer-level contactors and DiePak carriers. These products support testing for applications such as silicon carbide power semiconductors, silicon photonics and other devices used in automotive, computing and communications markets.