Acacia Communications (ACIA) versus Ambarella (AMBA) Head to Head Review

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Acacia Communications (NASDAQ: ACIA) and Ambarella (NASDAQ:AMBA) are both small-cap computer and technology companies, but which is the superior stock? We will contrast the two companies based on the strength of their institutional ownership, profitability, analyst recommendations, risk, dividends, earnings and valuation.

Earnings and Valuation

This table compares Acacia Communications and Ambarella’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Acacia Communications $385.17 million 3.52 $38.50 million $1.19 28.36
Ambarella $295.40 million 4.39 $18.85 million $0.55 70.53

Acacia Communications has higher revenue and earnings than Ambarella. Acacia Communications is trading at a lower price-to-earnings ratio than Ambarella, indicating that it is currently the more affordable of the two stocks.

Volatility and Risk

Acacia Communications has a beta of 1.25, indicating that its stock price is 25% more volatile than the S&P 500. Comparatively, Ambarella has a beta of 1.24, indicating that its stock price is 24% more volatile than the S&P 500.

Analyst Ratings

This is a summary of current ratings and target prices for Acacia Communications and Ambarella, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Acacia Communications 0 6 9 0 2.60
Ambarella 0 7 5 0 2.42

Acacia Communications currently has a consensus price target of $35.15, indicating a potential upside of 4.16%. Ambarella has a consensus price target of $56.44, indicating a potential upside of 45.51%. Given Ambarella’s higher probable upside, analysts clearly believe Ambarella is more favorable than Acacia Communications.

Insider & Institutional Ownership

89.9% of Acacia Communications shares are held by institutional investors. Comparatively, 68.9% of Ambarella shares are held by institutional investors. 33.2% of Acacia Communications shares are held by company insiders. Comparatively, 5.8% of Ambarella shares are held 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.

Profitability

This table compares Acacia Communications and Ambarella’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Acacia Communications -1.83% 4.95% 4.20%
Ambarella 2.18% 1.42% 1.25%

Summary

Acacia Communications beats Ambarella on 10 of the 14 factors compared between the two stocks.

About Acacia Communications

Acacia Communications, Inc. develops, manufactures, and sells high-speed coherent optical interconnect products in the Americas, Europe, the Middle East, Africa, and the Asia Pacific region. Its products include a series of low-power coherent digital signal processor application-specific integrated circuits and silicon photonic integrated circuits that are integrated into families of optical interconnect modules with transmission speeds ranging from 100 to 400 gigabits per second for use in long-haul, metro, and inter-data center markets. The company sells its products through a direct sales force to network equipment manufacturers, network operators, and cloud service providers. Acacia Communications, Inc. was founded in 2009 and is headquartered in Maynard, Massachusetts.

About Ambarella

Ambarella, Inc. develops semiconductor processing solutions for video that enable high-definition (HD), video capture, analysis, sharing, and display worldwide. The company's system-on-a-chip designs integrated HD video processing, image processing, computer vision functionality, audio processing, and system functions onto a single chip for delivering video and image quality, differentiated functionality, and low power consumption. Its solutions enable the creation of video content for wearable cameras, automotive cameras, and professional and consumer Internet Protocol (IP) security cameras, as well as cameras incorporated into unmanned aerial vehicles in the camera market; and manage IP video traffic, broadcast encoding and transcoding, and IP video delivery applications in the infrastructure market. The company sells its solutions to original design manufacturers and original equipment manufacturers through its direct sales force and distributors. Ambarella, Inc. was founded in 2004 and is headquartered in Santa Clara, California.

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