Reviewing O2Micro International (OIIM) & Microsemi Communications (VTSS)

O2Micro International (NASDAQ: OIIM) and Microsemi Communications (NASDAQ:VTSS) are both small-cap technology companies, but which is the superior stock? We will compare the two businesses based on the strength of their profitability, dividends, risk, earnings, analyst recommendations, valuation and institutional ownership.

Profitability

This table compares O2Micro International and Microsemi Communications’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
O2Micro International -6.99% -4.05% -3.62%
Microsemi Communications -20.36% -69.40% -23.46%

Insider & Institutional Ownership

39.9% of O2Micro International shares are owned by institutional investors. 8.0% of O2Micro International shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company is poised for long-term growth.

Volatility and Risk

O2Micro International has a beta of 0.07, indicating that its share price is 93% less volatile than the S&P 500. Comparatively, Microsemi Communications has a beta of 1.9, indicating that its share price is 90% more volatile than the S&P 500.

Earnings & Valuation

This table compares O2Micro International and Microsemi Communications’ top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
O2Micro International $56.56 million 0.74 -$2.98 million ($0.17) -9.59
Microsemi Communications N/A N/A N/A ($0.28) -18.86

Microsemi Communications has lower revenue, but higher earnings than O2Micro International. Microsemi Communications is trading at a lower price-to-earnings ratio than O2Micro International, indicating that it is currently the more affordable of the two stocks.

Analyst Recommendations

This is a breakdown of recent recommendations for O2Micro International and Microsemi Communications, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
O2Micro International 0 1 0 0 2.00
Microsemi Communications 0 0 0 0 N/A

O2Micro International currently has a consensus price target of $3.50, suggesting a potential upside of 114.72%. Given O2Micro International’s higher possible upside, equities research analysts clearly believe O2Micro International is more favorable than Microsemi Communications.

Summary

O2Micro International beats Microsemi Communications on 9 of the 10 factors compared between the two stocks.

About O2Micro International

O2Micro International Limited designs, develops and markets power management components for the Computer, Consumer, Industrial, Automotive and Communications markets. The Company’s power management products include integrated circuits (ICs) for liquid crystal display (LCD) and light emitting diode (LED) lighting; control and monitoring of battery charging and discharging; direct current (DC)/DC and alternating current (AC)/DC conversion, and provide select and switch functionality between power sources. It offers a range of products, including desktop and notebook monitors, portable media players, digital cameras, battery management systems for power tools, electric bikes, low emission vehicles (LEV) applications, industrial personal computers (PCs), portable media devices, smart phones, personal digital assistants (PDAs), global positioning system (GPS) units for navigational assistance in vehicles and electric and hybrid vehicle (EV/HEV) battery management.

About Microsemi Communications

Vitesse Semiconductor Corporation supplies high-performance integrated circuits used by manufacturers of networking systems for Carrier and Enterprise networking applications. The Company designs, develops and markets a diverse networking and connectivity IC solutions. The Company develops and manufactures variety of products that are marketed to Carrier and Enterprise networking, as well as data center infrastructure original equipment manufacturers. The Company’s product lines include Ethernet Switching Product Line that addresses Gigabit Ethernet and 10 Gigabit Ethernet applications in Carrier and Enterprise markets; Connectivity Product Line includes mixed-signal physical layer devices for connection of systems via optical fiber, copper cable, or backplanes and Transport Processing Product Line addresses the needs of Carrier network providers as they undergo a migration to new Ethernet packet-based networks.

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