Contrasting STMicroelectronics (NYSE:STM) and Universal Display (NASDAQ:OLED)

STMicroelectronics (NYSE:STM) and Universal Display (NASDAQ:OLED) are both technology companies, but which is the better business? We will contrast the two companies based on the strength of their profitability, dividends, analyst recommendations, institutional ownership, valuation, risk and earnings.

Analyst Recommendations

This is a summary of recent recommendations for STMicroelectronics and Universal Display, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
STMicroelectronics	0	5	7	0	2.58
Universal Display	1	4	3	0	2.25

STMicroelectronics currently has a consensus target price of $76.17, suggesting a potential upside of 47.83%. Universal Display has a consensus target price of $116.33, suggesting a potential upside of 45.58%. Given STMicroelectronics’ stronger consensus rating and higher possible upside, equities research analysts plainly believe STMicroelectronics is more favorable than Universal Display.

Institutional and Insider Ownership

5.0% of STMicroelectronics shares are owned by institutional investors. Comparatively, 78.2% of Universal Display shares are owned by institutional investors. 2.2% of Universal Display shares are owned by 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.

Dividends

STMicroelectronics pays an annual dividend of $0.31 per share and has a dividend yield of 0.6%. Universal Display pays an annual dividend of $2.00 per share and has a dividend yield of 2.5%. STMicroelectronics pays out 60.8% of its earnings in the form of a dividend. Universal Display pays out 48.4% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Universal Display has increased its dividend for 8 consecutive years. Universal Display is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Earnings & Valuation

This table compares STMicroelectronics and Universal Display”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
STMicroelectronics	$11.80 billion	3.92	$166.00 million	$0.51	101.03
Universal Display	$650.61 million	5.65	$242.07 million	$4.13	19.35

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

Profitability

This table compares STMicroelectronics and Universal Display’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
STMicroelectronics	3.56%	4.30%	3.07%
Universal Display	32.24%	11.35%	10.17%

Risk & Volatility

STMicroelectronics has a beta of 1.93, indicating that its share price is 93% more volatile than the S&P 500. Comparatively, Universal Display has a beta of 1.56, indicating that its share price is 56% more volatile than the S&P 500.

Summary

Universal Display beats STMicroelectronics on 11 of the 17 factors compared between the two stocks.

About STMicroelectronics

STMicroelectronics N.V., together with its subsidiaries, designs, develops, manufactures, and sells semiconductor products in Europe, the Middle East, Africa, the Americas, and the Asia Pacific. The company operates through Automotive and Discrete Group; Analog, MEMS and Sensors Group; and Microcontrollers and Digital ICs Group segments. The Automotive and Discrete Group segment offers automotive integrated circuits (ICs), and discrete and power transistor products. The Analog, MEMS and Sensors Group segment provides industrial application-specific integrated circuits (ASICs) and application-specific standard products (ASSPs); general purpose analog products; custom analog ICs; wireless charging solutions; galvanic isolated gate drivers; low and high voltage amplifiers, comparators, and current-sense amplifiers; MasterGaN, a solution that integrates a silicon driver and GaN power transistors in a single package; wireline and wireless connectivity ICs; touch screen controllers; micro-electro-mechanical systems (MEMS) products, including sensors or actuators; and optical sensing solutions. The Microcontrollers and Digital ICs Group segment offers general purpose and secure microcontrollers; and radio frequency (RF) products. It also offers application-specific standard products for analog, digital and mixed-signal applications. In addition, the company provides assembly and other services. It sells its products through distributors and retailers, as well as through sales representatives. The company serves automotive, industrial, personal electronics and communications equipment, and computers and peripherals markets. STMicroelectronics N.V. was incorporated in 1987 and is headquartered in Geneva, Switzerland.

About Universal Display

Universal Display Corporation engages in the research, development, and commercialization of organic light emitting diode (OLED) technologies and materials for use in display and solid-state lighting applications in the United States and internationally. The company offers PHOLED technologies and materials for displays and lighting products under the UniversalPHOLED brand. It is also involved in the research, development, and commercialization of other OLED device and manufacturing technologies, including FOLED that are flexible OLEDs for the fabrication of OLEDs on flexible substrates; and OVJP, an organic vapor jet printing technology. In addition, the company provides technology development and support services, including third-party collaboration and support to third parties for the commercialization of their OLED products; and contract research services in the areas of chemical synthesis research, development, and commercialization for non-OLED applications, as well as engages in the intellectual property and technology licensing activities. Universal Display Corporation was founded in 1985 and is headquartered in Ewing, New Jersey.