Semiconductor Manufacturing International Corporation (NYSE: SMI) and Cavium (NASDAQ:CAVM) are both mid-cap computer and technology companies, but which is the better investment? We will compare the two companies based on the strength of their institutional ownership, earnings, analyst recommendations, dividends, profitability, risk and valuation.

Valuation & Earnings

This table compares Semiconductor Manufacturing International Corporation and Cavium’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Semiconductor Manufacturing International Corporation $3.13 billion 2.22 $1.14 billion $0.34 18.59
Cavium $865.94 million 5.47 $79.41 million ($2.96) -23.28

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

Profitability

This table compares Semiconductor Manufacturing International Corporation and Cavium’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Semiconductor Manufacturing International Corporation 10.33% 5.63% 3.10%
Cavium -22.82% 5.94% 2.78%

Risk and Volatility

Semiconductor Manufacturing International Corporation has a beta of 0.29, suggesting that its stock price is 71% less volatile than the S&P 500. Comparatively, Cavium has a beta of 1.25, suggesting that its stock price is 25% more volatile than the S&P 500.

Institutional & Insider Ownership

0.7% of Semiconductor Manufacturing International Corporation shares are held by institutional investors. Comparatively, 98.4% of Cavium shares are held by institutional investors. 4.7% of Cavium shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.

Analyst Recommendations

This is a summary of recent ratings and price targets for Semiconductor Manufacturing International Corporation and Cavium, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Semiconductor Manufacturing International Corporation 3 2 2 0 1.86
Cavium 0 4 13 0 2.76

Semiconductor Manufacturing International Corporation currently has a consensus target price of $8.68, indicating a potential upside of 37.34%. Cavium has a consensus target price of $78.13, indicating a potential upside of 13.40%. Given Semiconductor Manufacturing International Corporation’s higher possible upside, equities analysts clearly believe Semiconductor Manufacturing International Corporation is more favorable than Cavium.

Summary

Cavium beats Semiconductor Manufacturing International Corporation on 8 of the 14 factors compared between the two stocks.

Semiconductor Manufacturing International Corporation Company Profile

Semiconductor Manufacturing International Corporation is an investment holding company principally engaged in the computer-aided design, manufacture, packaging and trading of integrated circuits (IC), as well as the provision of other semiconductor services. The Company is also involved in the design and manufacture of semiconductor masks. The Company’s main products are various types of wafers. The Company distributes its products in domestic market and to overseas markets, such as the Europe and the United States.

Cavium Company Profile

Cavium, Inc. is a provider of integrated semiconductor processors that enable intelligent processing for wired and wireless infrastructure and cloud for networking, communications, storage and security applications. The Company’s products consist of multi-core processors for embedded and data center applications, network connectivity for server and switches, storage connectivity, and security processors for offload and appliance. A range of its products also include a suite of embedded security protocols that enable unified threat management (UTM), secure connectivity, network perimeter protection and deep packet inspection (DPI). The Company sells its products to networking original equipment manufacturers (OEM), which sell into the enterprise, datacenter, service provider, and broadband and consumer markets. In the enterprise market, its products are used in routers, switches, storage appliances, server connectivity for networking and storage, wireless local area networks and UTM.

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