Critical Contrast: Microsemi (MSCC) vs. Ambarella (AMBA)

Microsemi (NASDAQ: MSCC) and Ambarella (NASDAQ:AMBA) are both computer and technology companies, but which is the superior stock? We will compare the two companies based on the strength of their valuation, profitability, dividends, analyst recommendations, institutional ownership, earnings and risk.

Analyst Ratings

This is a summary of current ratings for Microsemi and Ambarella, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Microsemi 0 2 11 0 2.85
Ambarella 0 5 7 0 2.58

Microsemi presently has a consensus price target of $66.60, indicating a potential upside of 15.81%. Ambarella has a consensus price target of $60.00, indicating a potential upside of 26.05%. Given Ambarella’s higher probable upside, analysts plainly believe Ambarella is more favorable than Microsemi.

Valuation & Earnings

This table compares Microsemi and Ambarella’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Microsemi $1.81 billion 3.73 $176.30 million $1.74 33.05
Ambarella $310.30 million 5.11 $57.81 million $1.04 45.77

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

Profitability

This table compares Microsemi and Ambarella’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Microsemi 11.10% 21.50% 9.55%
Ambarella 11.51% 7.87% 6.94%

Risk and Volatility

Microsemi has a beta of 1.33, meaning that its share price is 33% more volatile than the S&P 500. Comparatively, Ambarella has a beta of 1.52, meaning that its share price is 52% more volatile than the S&P 500.

Insider & Institutional Ownership

97.7% of Microsemi shares are held by institutional investors. Comparatively, 63.1% of Ambarella shares are held by institutional investors. 0.6% of Microsemi shares are held by insiders. Comparatively, 5.8% of Ambarella shares are held by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Summary

Microsemi beats Ambarella on 8 of the 14 factors compared between the two stocks.

Microsemi Company Profile

Microsemi Corporation is a designer, manufacturer and marketer of analog and mixed-signal semiconductor solutions differentiated by power, security, reliability and performance. The Company offers a portfolio of semiconductor and system solutions for aerospace and defense, communications, data center and industrial markets. Its products include high-performance and radiation-hardened analog mixed-signal integrated circuits (ICs), field programmable gate arrays (FPGAs), system on chip solutions (SoCs) and application-specific integrated circuits (ASICs) and power management products. The Company’s marketed products include Switchtec PFX PCIe switch, Flashtec NVM Express (NVMe)2032 and NVMe2016 controllers, Flashtec NVM Express (NVMe)2108 eight channel and NVMe2104 four channel controllers, PDS-EM-8100 PoE 2.5 gigabits per second (Gbps) Multiplexer, Chip Scale Atomic Clock (CSAC) components and miTimePLL.

Ambarella Company Profile

Ambarella, Inc. offers semiconductor processing solutions for video that enable high-definition (HD), video capture, sharing and display. The Company operates through the development and sale of low-power, high-definition video products segment. Its system-on-a-chip designs incorporate HD video processing, image processing, audio processing and system functions onto a single chip. In the camera market, its platform enables the creation of video content in wearable cameras, automotive aftermarket cameras, professional and consumer Internet Protocol (IP), security cameras, telepresence cameras and unmanned aerial vehicles. In the infrastructure market, its solutions manage IP video traffic, broadcast encoding and transcoding, and IP video delivery applications. AmbaClear is its image signal processing architecture. AmbaCast is its HD video processing architecture. It offers the MotorVu 3D 360 degrees Surround View reference design for automotive original equipment manufacturer market.

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