AU Optronics (AUO) vs. DSP Group (DSPG) Critical Survey

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AU Optronics (NYSE: AUO) and DSP Group (NASDAQ:DSPG) are both computer and technology companies, but which is the superior investment? We will compare the two businesses based on the strength of their dividends, profitability, analyst recommendations, institutional ownership, earnings, valuation and risk.

Institutional & Insider Ownership

6.5% of AU Optronics shares are held by institutional investors. Comparatively, 76.5% of DSP Group shares are held by institutional investors. 16.0% of AU Optronics shares are held by insiders. Comparatively, 5.3% of DSP Group shares are held 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.

Risk and Volatility

AU Optronics has a beta of 0.86, meaning that its share price is 14% less volatile than the S&P 500. Comparatively, DSP Group has a beta of 0.81, meaning that its share price is 19% less volatile than the S&P 500.

Analyst Ratings

This is a breakdown of recent ratings and price targets for AU Optronics and DSP Group, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
AU Optronics 3 3 0 0 1.50
DSP Group 0 0 4 0 3.00

DSP Group has a consensus target price of $15.75, indicating a potential upside of 35.19%. Given DSP Group’s stronger consensus rating and higher probable upside, analysts plainly believe DSP Group is more favorable than AU Optronics.

Profitability

This table compares AU Optronics and DSP Group’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
AU Optronics 8.28% 12.28% 6.20%
DSP Group -1.51% 3.57% 2.83%

Earnings and Valuation

This table compares AU Optronics and DSP Group’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
AU Optronics $11.51 billion 0.36 $1.40 billion $1.13 3.78
DSP Group $124.75 million 2.12 -$3.00 million $0.17 68.53

AU Optronics has higher revenue and earnings than DSP Group. AU Optronics is trading at a lower price-to-earnings ratio than DSP Group, indicating that it is currently the more affordable of the two stocks.

Summary

AU Optronics beats DSP Group on 8 of the 14 factors compared between the two stocks.

About AU Optronics

AU Optronics Corp. researches, develops, produces, and sells thin film transistor liquid crystal displays and other flat panel displays. The company operates through two segments, Display and Solar. The Display segment designs, develops, manufactures, assembles, and markets flat panel displays for use in televisions (TVs), TV sets, and other related products; desktop monitors; mobile PCs, such as notebooks and tablets; mobile phones; and commercial and other applications, including displays for automobiles, industrial PCs, automated teller machines, point of sale terminals, pachinko machines, medical equipment, and others. This segment serves original equipment manufacturing service providers; and brand companies. The Solar segment manufactures and sells solar materials, including ingots, solar wafers, and solar modules, as well as provides technical engineering and maintenance services for solar system projects. This segment sells its ingot and solar wafer products primarily to solar cell manufacturers; and solar modules to installers, solar system integrators, property developers, and other value-added resellers. The company also engages in the renewable energy power generation; repairing and sale support of TFT-LCD modules, as well as sale support of solar-related products; injecting and stamping parts; manufacture and sale of molds, light guide plates, liquid crystal products, backlight modules, and related parts, as well as precision plastic and metal parts; IP related business; design, development and sales of software and hardware for health care industry; manufacture, assembly, and sale of automotive parts; manufacture and sale of motorized treadmills; and planning, design, and development of construction for environmental protection and related project management. It operates in the People's Republic of China, Taiwan, Japan, Singapore, and internationally. AU Optronics Corp. was founded in 1996 and is headquartered in Hsinchu, Taiwan.

About DSP Group

DSP Group, Inc., a fabless semiconductor company, provides wireless and audio chipset solutions for converged communications worldwide. It operates through three segments: Home, Office, and SmartVoice. The company provides a portfolio of wireless chipsets that integrate DECT/CAT-iq, ULE, Wi-Fi, PSTN, HDClear, video, and VoIP technologies. It also enables converged voice, audio, video, and data connectivity across various mobile, consumer, and enterprise products, including mobile phones, IoT and wearable devices, connected multimedia screens, home automation and security, cordless phones, VoIP systems, and home gateways. The company sells its products primarily through distributors, as well as directly to original equipment manufacturers and original design manufacturers. DSP Group, Inc. was founded in 1979 and is headquartered in Milpitas, California.

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