Critical Review: Silicon Motion Technology Corporation (SIMO) vs. Coherent (NASDAQ:COHR)

Silicon Motion Technology Corporation (NASDAQ: SIMO) and Coherent (NASDAQ:COHR) are both semiconductors – nec companies, but which is the better stock? We will contrast the two businesses based on the strength of their valuation, dividends, institutional ownership, profitability, analyst recommendations, earnings and risk.

Valuation and Earnings

This table compares Silicon Motion Technology Corporation and Coherent’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio NetIncome Earnings Per Share Price/Earnings Ratio
Silicon Motion Technology Corporation $556.15 million 2.99 $110.94 million $2.56 18.37
Coherent $1.72 billion 4.29 $207.12 million $8.34 35.98

Coherent has higher revenue and earnings than Silicon Motion Technology Corporation. Silicon Motion Technology Corporation is trading at a lower price-to-earnings ratio than Coherent, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Silicon Motion Technology Corporation and Coherent’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Silicon Motion Technology Corporation 17.18% 19.58% 14.98%
Coherent 12.02% 28.53% 13.28%

Analyst Recommendations

This is a summary of current recommendations and price targets for Silicon Motion Technology Corporation and Coherent, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Silicon Motion Technology Corporation 0 3 10 0 2.77
Coherent 0 0 8 0 3.00

Silicon Motion Technology Corporation currently has a consensus price target of $57.67, indicating a potential upside of 22.62%. Coherent has a consensus price target of $314.88, indicating a potential upside of 4.93%. Given Silicon Motion Technology Corporation’s higher probable upside, analysts plainly believe Silicon Motion Technology Corporation is more favorable than Coherent.

Institutional & Insider Ownership

79.5% of Silicon Motion Technology Corporation shares are owned by institutional investors. Comparatively, 91.6% of Coherent shares are owned by institutional investors. 1.4% of Coherent shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock is poised for long-term growth.

Dividends

Silicon Motion Technology Corporation pays an annual dividend of $0.89 per share and has a dividend yield of 1.9%. Coherent does not pay a dividend. Silicon Motion Technology Corporation pays out 34.8% of its earnings in the form of a dividend.

Risk and Volatility

Silicon Motion Technology Corporation has a beta of 0.65, meaning that its share price is 35% less volatile than the S&P 500. Comparatively, Coherent has a beta of 0.79, meaning that its share price is 21% less volatile than the S&P 500.

Summary

Coherent beats Silicon Motion Technology Corporation on 11 of the 16 factors compared between the two stocks.

Silicon Motion Technology Corporation Company Profile

Silicon Motion Technology Corporation is a fabless semiconductor company. The Company designs, develops and markets low-power semiconductor solutions to original equipment manufacturers (OEMs) and other customers in the mobile storage and mobile communications markets. It is engaged in developing negative-AND (NAND) flash controller integrated circuits (ICs) for solid-state storage devices and specialty radio frequency (RF) ICs for mobile devices. In the mobile storage market, the Company’s products are controllers used in embedded storage products, such as Solid State Drives (SSDs), and Embedded Multimedia Cards (eMMCs), as well as expandable storage products, such as flash memory cards and universal serial bus (USB) flash drives. For the mobile communications market, the Company’s products are handset transceivers and mobile television (TV) System on Chips (SoCs). The Company’s products are used in devices, such as smartphones, tablets and personal computers (PCs).

Coherent Company Profile

Coherent, Inc. is a photonics manufacturer. The Company is engaged in designing, manufacturing, servicing and marketing of lasers and related accessories for a range of scientific, commercial and industrial applications. It operates through two segments: Specialty Lasers and Systems (SLS) and Commercial Lasers and Components (CLC). SLS develops and manufactures configurable products serving the microelectronics, scientific research and government programs, and original equipment manufacturer (OEM) components and instrumentation markets. The Commercial Lasers and Components segment focuses on higher volume products that are offered in set configurations. The product architectures are designed for exchange at the point of use such that substantially all product service and repairs are based upon advanced replacement and depot (that is factory) repair. CLC’s primary markets include materials processing, OEM components, and instrumentation and microelectronics.

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