Head to Head Comparison: Cohu (NASDAQ:COHU) and AXT (NASDAQ:AXTI)

AXT (NASDAQ:AXTI) and Cohu (NASDAQ:COHU) are both mid-cap technology companies, but which is the superior investment? We will contrast the two companies based on the strength of their profitability, dividends, institutional ownership, earnings, analyst recommendations, valuation and risk.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
AXT	18.53%	5.21%	3.97%
Cohu	-3.97%	1.47%	0.91%

Earnings and Valuation

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

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
AXT	$88.33 million	34.87	-$21.26 million	$0.45	104.38
Cohu	$569.31 million	3.82	-$74.27 million	($0.52)	-88.40

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

Volatility and Risk

AXT has a beta of 2.01, indicating that its share price is 101% more volatile than the S&P 500. Comparatively, Cohu has a beta of 1.6, indicating that its share price is 60% more volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of current ratings and price targets for AXT and Cohu, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
AXT	1	1	3	1	2.67
Cohu	1	1	7	1	2.80

AXT currently has a consensus price target of $77.80, suggesting a potential upside of 65.64%. Cohu has a consensus price target of $72.50, suggesting a potential upside of 57.71%. Given AXT’s higher possible upside, research analysts plainly believe AXT is more favorable than Cohu.

Insider & Institutional Ownership

49.5% of AXT shares are held by institutional investors. Comparatively, 94.7% of Cohu shares are held by institutional investors. 6.0% of AXT shares are held by insiders. Comparatively, 3.0% of Cohu shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Summary

AXT beats Cohu on 10 of the 14 factors compared between the two stocks.

About AXT

AXT, Inc. develops and manufactures compound semiconductor substrate materials used to make electronic and optoelectronic devices. Its products include indium phosphide, gallium arsenide and germanium substrates, supplied in wafer form for use by semiconductor manufacturers. These materials support applications such as fiber-optic and data communications, wireless devices, lasers, LEDs and solar cells. AXT also provides substrate processing services, including wafer polishing and finishing. Founded in 1986 and headquartered in Fremont, California, AXT serves customers around the world.

About Cohu

Cohu, Inc. designs and manufactures equipment and components used to test, inspect, and handle semiconductors. Its products include semiconductor test handlers, inspection systems, test contactors, and thermal subsystems that support testing at various stages of chip production. The company serves semiconductor manufacturers and outsourced semiconductor assembly and test providers around the world. Its equipment is used across a range of semiconductor applications, including devices for automotive, industrial, communications, and consumer markets.