Critical Contrast: Intel (INTC) & Silicon Motion Technology (SIMO)

Intel (NASDAQ: INTC) and Silicon Motion Technology (NASDAQ:SIMO) are both technology companies, but which is the superior business? We will contrast the two businesses based on the strength of their profitability, valuation, analyst recommendations, earnings, institutional ownership, risk and dividends.

Profitability

This table compares Intel and Silicon Motion Technology’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Intel 15.30% 24.33% 13.73%
Silicon Motion Technology 14.34% 15.33% 11.63%

Insider and Institutional Ownership

67.4% of Intel shares are owned by institutional investors. Comparatively, 82.9% of Silicon Motion Technology shares are owned by institutional investors. 0.1% of Intel shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.

Valuation and Earnings

This table compares Intel and Silicon Motion Technology’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Intel $62.76 billion 3.28 $9.60 billion $1.98 22.20
Silicon Motion Technology $523.40 million 3.01 $110.94 million $2.08 21.45

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

Risk & Volatility

Intel has a beta of 1.07, meaning that its share price is 7% more volatile than the S&P 500. Comparatively, Silicon Motion Technology has a beta of 0.46, meaning that its share price is 54% less volatile than the S&P 500.

Dividends

Intel pays an annual dividend of $1.20 per share and has a dividend yield of 2.7%. Silicon Motion Technology pays an annual dividend of $0.89 per share and has a dividend yield of 2.0%. Intel pays out 60.6% of its earnings in the form of a dividend. Silicon Motion Technology pays out 42.8% 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. Silicon Motion Technology has increased its dividend for 3 consecutive years.

Analyst Ratings

This is a breakdown of recent recommendations and price targets for Intel and Silicon Motion Technology, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Intel 4 10 26 0 2.55
Silicon Motion Technology 1 1 11 0 2.77

Intel currently has a consensus target price of $49.00, indicating a potential upside of 11.49%. Silicon Motion Technology has a consensus target price of $56.56, indicating a potential upside of 26.79%. Given Silicon Motion Technology’s stronger consensus rating and higher probable upside, analysts plainly believe Silicon Motion Technology is more favorable than Intel.

Summary

Intel beats Silicon Motion Technology on 11 of the 17 factors compared between the two stocks.

Intel Company Profile

Intel Corporation is engaged in designing and manufacturing products and technologies, such as the cloud. The Company’s segments are Client Computing Group (CCG), Data Center Group (DCG), Internet of Things Group (IOTG), Non-Volatile Memory Solutions Group (NSG), Intel Security Group (ISecG), Programmable Solutions Group (PSG), All Other and New Technology Group (NTG). It delivers computer, networking and communications platforms to a set of customers, including original equipment manufacturers (OEMs), original design manufacturers (ODMs), cloud and communications service providers, as well as industrial, communications and automotive equipment manufacturers. It offers platforms to integrate various components and technologies, including a microprocessor and chipset, a stand-alone System-on-Chip (SoC), or a multichip package. The CCG operating segment includes platforms that integrates in notebook, two in one systems, desktop computers for consumers and businesses, tablets, and phones.

Silicon Motion Technology Company Profile

Silicon Motion Technology Corporation is a fabless semiconductor company. The Company designs, develops and markets low-power semiconductor solutions to original equipment manufacturers (OEMs) and other customers in the mobile storage and mobile communications markets. It is engaged in developing negative-AND (NAND) flash controller integrated circuits (ICs) for solid-state storage devices and specialty radio frequency (RF) ICs for mobile devices. In the mobile storage market, the Company’s products are controllers used in embedded storage products, such as Solid State Drives (SSDs), and Embedded Multimedia Cards (eMMCs), as well as expandable storage products, such as flash memory cards and universal serial bus (USB) flash drives. For the mobile communications market, the Company’s products are handset transceivers and mobile television (TV) System on Chips (SoCs). The Company’s products are used in devices, such as smartphones, tablets and personal computers (PCs).

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