Financial Analysis: Power Integrations (POWI) & Spansion (CODE)

Power Integrations (NASDAQ: POWI) and Spansion (NYSE:CODE) are both mid-cap computer and technology companies, but which is the better stock? We will contrast the two companies based on the strength of their dividends, risk, earnings, analyst recommendations, valuation, institutional ownership and profitability.

Dividends

Power Integrations pays an annual dividend of $0.56 per share and has a dividend yield of 0.7%. Spansion does not pay a dividend. Power Integrations pays out 29.0% of its earnings in the form of a dividend.

Profitability

This table compares Power Integrations and Spansion’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Power Integrations 13.69% 11.95% 10.73%
Spansion -7.99% -18.66% -7.19%

Valuation & Earnings

This table compares Power Integrations and Spansion’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Power Integrations $387.39 million 5.93 $47.89 million $1.93 40.03
Spansion N/A N/A N/A ($1.15) -33.50

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

Analyst Recommendations

This is a breakdown of recent recommendations and price targets for Power Integrations and Spansion, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Power Integrations 0 2 3 0 2.60
Spansion 0 0 0 0 N/A

Power Integrations presently has a consensus target price of $81.00, indicating a potential upside of 4.85%. Given Power Integrations’ higher probable upside, equities analysts plainly believe Power Integrations is more favorable than Spansion.

Insider & Institutional Ownership

97.3% of Power Integrations shares are held by institutional investors. 4.3% of Power Integrations shares are held 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.

Summary

Power Integrations beats Spansion on 11 of the 12 factors compared between the two stocks.

Power Integrations Company Profile

Power Integrations, Inc. designs, develops and markets analog and mixed-signal integrated circuits (ICs), and other electronic components and circuitry used in high-voltage power conversion. The Company’s products are used in power converters that convert electricity from a high-voltage source to the type of power required for downstream use. The Company’s ICs used in alternating current (AC)-direct current (DC) power supply convert high-voltage AC from a wall outlet to the low-voltage DC required by electronic devices. The Company offers a range of products, such as TOPSwitch, TinySwitch, LinkSwitch and Hiper families. The Company also offers CapZero and SenZero families. The Company offers a range of high-voltage gate-driver products sold under the SCALE and SCALE-II product-family names. The DPA-Switch family of products is a monolithic high-voltage DC-DC power conversion IC designed specifically for use in distributed power architectures.

Spansion Company Profile

Spansion Inc. (Spansion) is a designer, manufacturer and developer of embedded systems solutions. The Company’s embedded systems solutions address a variety of applications, including automotive, consumer electronics, networking and telecommunications equipment, tablets, personal computers (PCs), gaming consoles and industrial equipment with a range of products. The Company has two product groups for embedded applications: flash memory and microcontrollers/analog products. Its flash memory market consists of two architectures: NOR and NAND flash memory. NOR flash memory is used for code execution and storage in consumer electronics, automobiles, communications, gaming and industrial applications. NAND flash memory is used for data storage in applications, such as solid-state drives, removable storage devices and embedded managed NAND devices. The Company focuses on embedded markets, such as transportation, industrial, consumer, communications and gaming markets.

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