Vimicro International (NASDAQ: VIMC) and Microchip Technology (NASDAQ:MCHP) are both 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.

Risk and Volatility

Vimicro International has a beta of 0.39, suggesting that its share price is 61% less volatile than the S&P 500. Comparatively, Microchip Technology has a beta of 1, suggesting that its share price has a similar volatility profile to the S&P 500.

Dividends

Microchip Technology pays an annual dividend of $1.45 per share and has a dividend yield of 1.6%. Vimicro International does not pay a dividend. Microchip Technology pays out 58.0% of its earnings in the form of a dividend. Microchip Technology has increased its dividend for 16 consecutive years.

Earnings and Valuation

This table compares Vimicro International and Microchip Technology’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Vimicro International N/A N/A N/A $0.29 46.31
Microchip Technology $3.41 billion 6.41 $164.63 million $2.50 37.38

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

Analyst Recommendations

This is a summary of recent ratings and price targets for Vimicro International and Microchip Technology, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Vimicro International 0 0 0 0 N/A
Microchip Technology 0 4 11 1 2.81

Microchip Technology has a consensus target price of $101.13, indicating a potential upside of 8.22%. Given Microchip Technology’s higher possible upside, analysts clearly believe Microchip Technology is more favorable than Vimicro International.

Profitability

This table compares Vimicro International and Microchip Technology’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Vimicro International 20.38% 17.78% 8.86%
Microchip Technology 16.23% 35.48% 14.75%

Summary

Microchip Technology beats Vimicro International on 10 of the 13 factors compared between the two stocks.

About Vimicro International

Vimicro International Corporation is a holding company. The Company is a provider of video surveillance technology and solutions that designs, develops and markets a range of video surveillance products and solutions to Government entities, private enterprises and consumers. It operates in two segments: Video surveillance solutions business and Video processors business. Video surveillance solutions business, which refers business activities that are engaged in the design, manufacture and sale of video surveillance solutions and products and provision of related services, and Video processors business, which refers business activities that are engaged in the design, manufacture and sale of video processors, including the video processors used in video surveillance solutions and personal computer camera processors. It provides video surveillance products and solutions ranging from front-end Internet Protocol cameras to back-end software platform using its chip and algorithm technology.

About Microchip Technology

Microchip Technology Incorporated is engaged in developing, manufacturing and selling specialized semiconductor products used by its customers for a range of embedded control applications. The Company operates through two segments: semiconductor products and technology licensing. In the semiconductor products segment, the Company designs, develops, manufactures and markets microcontrollers, development tools and analog, interface, mixed signal and timing products. Its functional activities include sales, marketing, manufacturing, information technology, human resources, legal and finance. Its product portfolio comprises general purpose and specialized 8-bit, 16-bit, and 32-bit microcontrollers, a spectrum of linear, mixed-signal, power management, thermal management, radio frequency (RF), timing, safety, security, wired connectivity and wireless connectivity devices, as well as serial electrically erasable programmable read-only memories (EEPROMs) and serial flash memories.

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