Cypress Semiconductor (NASDAQ: CY) and Cabot Microelectronics (NASDAQ:CCMP) are both mid-cap technology companies, but which is the better investment? We will compare the two companies based on the strength of their institutional ownership, profitability, valuation, analyst recommendations, dividends, earnings and risk.

Valuation & Earnings

This table compares Cypress Semiconductor and Cabot Microelectronics’ revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Cypress Semiconductor $1.92 billion 2.66 -$686.25 million ($0.40) -38.30
Cabot Microelectronics $507.18 million 4.66 $86.95 million $3.39 27.50

Cabot Microelectronics has lower revenue, but higher earnings than Cypress Semiconductor. Cypress Semiconductor is trading at a lower price-to-earnings ratio than Cabot Microelectronics, indicating that it is currently the more affordable of the two stocks.

Insider and Institutional Ownership

97.4% of Cypress Semiconductor shares are owned by institutional investors. Comparatively, 93.1% of Cabot Microelectronics shares are owned by institutional investors. 0.7% of Cypress Semiconductor shares are owned by company insiders. Comparatively, 5.5% of Cabot Microelectronics shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Risk & Volatility

Cypress Semiconductor has a beta of 2.01, meaning that its stock price is 101% more volatile than the S&P 500. Comparatively, Cabot Microelectronics has a beta of 1.42, meaning that its stock price is 42% more volatile than the S&P 500.

Profitability

This table compares Cypress Semiconductor and Cabot Microelectronics’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Cypress Semiconductor -5.75% 9.01% 4.43%
Cabot Microelectronics 17.10% 16.27% 11.56%

Dividends

Cypress Semiconductor pays an annual dividend of $0.44 per share and has a dividend yield of 2.9%. Cabot Microelectronics pays an annual dividend of $0.80 per share and has a dividend yield of 0.9%. Cypress Semiconductor pays out -110.0% of its earnings in the form of a dividend. Cabot Microelectronics pays out 23.6% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Cypress Semiconductor is clearly the better dividend stock, given its higher yield and lower payout ratio.

Analyst Recommendations

This is a breakdown of recent recommendations and price targets for Cypress Semiconductor and Cabot Microelectronics, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Cypress Semiconductor 1 3 8 0 2.58
Cabot Microelectronics 0 1 4 0 2.80

Cypress Semiconductor presently has a consensus price target of $17.45, suggesting a potential upside of 13.93%. Cabot Microelectronics has a consensus price target of $95.67, suggesting a potential upside of 2.62%. Given Cypress Semiconductor’s higher probable upside, equities analysts plainly believe Cypress Semiconductor is more favorable than Cabot Microelectronics.

About Cypress Semiconductor

Cypress Semiconductor Corporation manufactures embedded system solutions for automotive, industrial, home automation and appliances, consumer electronics and medical products. The Company’s segments include Microcontroller and Connectivity Division (MCD), and Memory Products Division (MPD). MCD focuses on microcontroller (MCU), analog and wireless and wired connectivity solutions. MPD focuses on parallel and serial NOR flash memories, NAND flash memories, static random access memory (SRAM), ferroelectric-random access memory (F-RAM) ferroelectric memory devices and other specialty memories. The Company’s products include Traveo MCUs and Flexible MCUs; PSoC 1, PSoC 3, PSoC 4 and PSoC 5LP; CapSense, and TrueTouch Analog Power Management integrated circuits (PMICs) and energy harvesting solutions.

About Cabot Microelectronics

Cabot Microelectronics Corporation supplies polishing slurries and pads used in the manufacture of integrated circuit (IC) devices within the semiconductor industry, in a process called chemical mechanical planarization (CMP). The Company is engaged in the development, manufacture and sale of CMP consumables. The Company develops, produces and sells CMP slurries for polishing conducting and insulating materials used in IC devices, and also for polishing the disk substrates and magnetic heads used in hard disk drives. It also develops, manufactures and sells CMP polishing pads, which are used in conjunction with slurries in the CMP process. The Company also pursues other surface modification applications through its engineered surface finishes (ESF) business. The Company offers CMP polishing pads, under the Epic and NexPlanar brand names, for a range of applications and technology nodes.

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