Comparing Magnachip Semiconductor (NYSE:MX) and Ambarella (NYSE:AMBA)

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

Insider & Institutional Ownership

87.6% of Magnachip Semiconductor shares are owned by institutional investors. Comparatively, 74.8% of Ambarella shares are owned by institutional investors. 5.5% of Magnachip Semiconductor shares are owned by insiders. Comparatively, 6.3% of Ambarella shares are owned by 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 Magnachip Semiconductor and Ambarella’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Magnachip Semiconductor -5.49% -20.36% 1.00%
Ambarella -17.32% -10.24% -9.11%

Analyst Ratings

This is a breakdown of recent recommendations for Magnachip Semiconductor and Ambarella, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Magnachip Semiconductor 0 1 2 0 2.67
Ambarella 2 2 5 0 2.33

Magnachip Semiconductor currently has a consensus target price of $10.67, indicating a potential upside of 4.68%. Ambarella has a consensus target price of $45.88, indicating a potential downside of 0.85%. Given Magnachip Semiconductor’s stronger consensus rating and higher probable upside, analysts plainly believe Magnachip Semiconductor is more favorable than Ambarella.

Risk and Volatility

Magnachip Semiconductor has a beta of 0.84, indicating that its stock price is 16% less volatile than the S&P 500. Comparatively, Ambarella has a beta of 1.32, indicating that its stock price is 32% more volatile than the S&P 500.

Earnings and Valuation

This table compares Magnachip Semiconductor and Ambarella’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Magnachip Semiconductor $750.90 million 0.46 -$3.90 million $0.71 14.35
Ambarella $227.77 million 6.65 -$30.45 million ($1.11) -41.68

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

Summary

Magnachip Semiconductor beats Ambarella on 9 of the 14 factors compared between the two stocks.

About Magnachip Semiconductor

MagnaChip Semiconductor Corporation, together with its subsidiaries, designs, manufactures, and sells analog and mixed-signal semiconductor platform solutions for communications, Internet of Things, consumer, industrial, and automotive applications. The company operates through two segments, Foundry Services Group and Standard Products Group. The Foundry Services Group segment provides analog and mixed-signal foundry services for fabless and integrated device manufacturer semiconductor companies to manufacture a range of products, including display drivers, light emitting diode (LED) drivers, audio encoding and decoding devices, microcontrollers, touch screen controllers, RF switches, park distance control sensors for automotive, electronic tag memories, and power management semiconductors. The Standard Products Group segment offers display solutions, including source and gate drivers, and timing controllers that cover a range of flat panel displays used in ultra-high definition, high definition, full high definition, LED, 3D and organic light emitting diodes televisions and displays, notebooks, and mobile communications and entertainment devices. This segment also offers power management semiconductor products, such as metal oxide semiconductor field effect transistors, insulated gate bipolar transistors, converters, LED drivers, SSD PMIC products, and switching and linear regulators for televisions, smartphones, mobile phones, desktop PCs, notebooks, tablet PCs, other consumer electronics, and consumer appliances, as well as for industrial applications. It serves consumer, computing, and industrial electronics original equipment manufacturers; original design manufacturers; and electronics manufacturing services companies, as well as subsystem designers. The company sells its products through a direct sales force, as well as through a network of agents and distributors worldwide. MagnaChip Semiconductor Corporation is based in Luxembourg City, Luxembourg.

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, unmanned aerial vehicle cameras, and virtual reality cameras, as well as Internet Protocol security cameras for professional use and home security and monitoring. 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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