Critical Review: Magnachip Semiconductor (MX) vs. Atmel (ATML)

Magnachip Semiconductor (NYSE: MX) and Atmel (NASDAQ:ATML) are both computer and technology companies, but which is the better investment? We will compare the two businesses based on the strength of their profitability, valuation, institutional ownership, risk, dividends, earnings and analyst recommendations.

Dividends

Atmel pays an annual dividend of $0.08 per share and has a dividend yield of 1.0%. Magnachip Semiconductor does not pay a dividend. Atmel pays out 133.3% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Earnings and Valuation

This table compares Magnachip Semiconductor and Atmel’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Magnachip Semiconductor $679.67 million 0.46 $84.94 million $1.95 4.72
Atmel N/A N/A N/A $0.06 135.67

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

Insider & Institutional Ownership

90.3% of Magnachip Semiconductor shares are held by institutional investors. 3.8% of Magnachip Semiconductor shares are held by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Profitability

This table compares Magnachip Semiconductor and Atmel’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Magnachip Semiconductor 12.50% -40.94% 5.43%
Atmel 1.81% 2.18% 1.48%

Analyst Ratings

This is a summary of current ratings and recommmendations for Magnachip Semiconductor and Atmel, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Magnachip Semiconductor 0 1 1 0 2.50
Atmel 0 0 0 0 N/A

Magnachip Semiconductor presently has a consensus price target of $13.00, indicating a potential upside of 41.30%. Given Magnachip Semiconductor’s higher possible upside, analysts clearly believe Magnachip Semiconductor is more favorable than Atmel.

Volatility and Risk

Magnachip Semiconductor has a beta of -0.04, indicating that its share price is 104% less volatile than the S&P 500. Comparatively, Atmel has a beta of 1.4, indicating that its share price is 40% more volatile than the S&P 500.

Summary

Magnachip Semiconductor beats Atmel on 9 of the 13 factors compared between the two stocks.

Magnachip Semiconductor Company Profile

MagnaChip Semiconductor Corporation is a designer and manufacturer of analog and mixed-signal semiconductor products for consumer, computing, communication, industrial, automotive and Internet of Things (IoT) applications. The Company provides technology platforms for analog, mixed signal, power, high voltage, non-volatile memory and Radio Frequency (RF) applications. The Company has two segments: Foundry Services Group and Standard Products Group. The Company’s Foundry Services Group provides analog and mixed-signal foundry services to semiconductor companies and Integrated Device Manufacturers (IDMs) that serve consumer, computing, communication, industrial, automotive and IoT applications. The Company manufactures wafers-based on its customers’ product designs. The Company’s Standard Products Group includes its Display Solutions and Power Solutions business lines.

Atmel Company Profile

Atmel Corporation supplies microcontrollers. The Company operates through four segments: Microcontroller, Nonvolatile Memory, Automotive and Multi-Market and Other. The Microcontroller segment includes its microcontroller and microprocessor families; AVR 8-bit and 32-bit products; Atmel SMART ARM-based products; designated commercial wireless products, including low power radio and System-on-a-chip products; optimized products for smart energy, touch button, and mobile sensor hub and Light Emitting Diode (LED) lighting applications, and maXTouch capacitive touch product families. The Nonvolatile Memory segment includes electrically erasable programmable read-only, erasable programmable read-only memory devices and secure cryptographic products. The Automotive segment includes devices for automotive electronics, including products using radio frequency technology. The Multi-Market and Other segment includes application specific and standard products for aerospace applications.

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