Comparing MACOM Technology Solutions (MTSI) & AXT (AXTI)

MACOM Technology Solutions (NASDAQ:MTSI) and AXT (NASDAQ:AXTI) are both small-cap computer and technology companies, but which is the superior investment? We will compare the two businesses based on the strength of their profitability, risk, institutional ownership, dividends, analyst recommendations, valuation and earnings.

Profitability

This table compares MACOM Technology Solutions and AXT’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
MACOM Technology Solutions -22.92% 3.33% 1.58%
AXT 13.51% 7.72% 6.77%

Risk and Volatility

MACOM Technology Solutions has a beta of 1.77, meaning that its share price is 77% more volatile than the S&P 500. Comparatively, AXT has a beta of 1.09, meaning that its share price is 9% more volatile than the S&P 500.

Analyst Ratings

This is a breakdown of current recommendations and price targets for MACOM Technology Solutions and AXT, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
MACOM Technology Solutions 3 4 4 0 2.09
AXT 0 0 4 0 3.00

MACOM Technology Solutions currently has a consensus target price of $30.27, indicating a potential upside of 92.94%. AXT has a consensus target price of $10.50, indicating a potential upside of 73.27%. Given MACOM Technology Solutions’ higher probable upside, research analysts plainly believe MACOM Technology Solutions is more favorable than AXT.

Valuation and Earnings

This table compares MACOM Technology Solutions and AXT’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
MACOM Technology Solutions $698.77 million 1.46 -$169.49 million $1.88 8.35
AXT $98.67 million 2.43 $10.14 million $0.26 23.31

AXT has lower revenue, but higher earnings than MACOM Technology Solutions. MACOM Technology Solutions is trading at a lower price-to-earnings ratio than AXT, indicating that it is currently the more affordable of the two stocks.

Institutional and Insider Ownership

89.9% of MACOM Technology Solutions shares are held by institutional investors. Comparatively, 55.1% of AXT shares are held by institutional investors. 32.2% of MACOM Technology Solutions shares are held by company insiders. Comparatively, 7.0% of AXT shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Summary

AXT beats MACOM Technology Solutions on 7 of the 13 factors compared between the two stocks.

MACOM Technology Solutions Company Profile

MACOM Technology Solutions Holdings, Inc., together with its subsidiaries, designs and manufactures analog radio frequency (RF), microwave, millimeterwave, and photonic semiconductor solutions in the United States, the Asia Pacific, and internationally. The company offers a portfolio of standard and custom devices, which include integrated circuits, multi-chip modules, power pallets and transistors, diodes, amplifiers, switches and switch limiters, passive and active components, and complete subsystems for more than 60 product lines. Its semiconductor products are electronic components that are incorporated in electronic systems, such as point-to-point wireless backhaul radios, high density networks, active antenna arrays, radars, magnetic resonance imaging systems, and unmanned aerial vehicles. The company serves various markets, such as networks, which includes carrier and enterprise infrastructure, wired broadband and cellular backhaul, cellular infrastructure, photonic solutions, and fiber optic applications; aerospace and defense comprising military and commercial radar, RF jammers, electronic countermeasures, and communication data links; and multi-market that consist of industrial, medical, test and measurement, and scientific applications. It sells its products through direct sales force, applications engineering staff, independent sales representatives, resellers, and distributors, as well as an e-commerce channel. MACOM Technology Solutions Holdings, Inc. was incorporated in 2009 and is headquartered in Lowell, Massachusetts.

AXT Company Profile

AXT, Inc. designs, develops, manufactures, and distributes compound and single element semiconductor substrates. It manufactures semiconductor substrates using its proprietary vertical gradient freeze technology. The company offers indium phosphide (InP) for use in fiber optic lasers and detectors, passive optical networks, data center connectivity, silicon photonics, photonic integrated circuits, terrestrial solar cells, lasers, military wireless RF amplifiers, infrared motion control, and infrared thermal imaging products. It also provides semi-insulating gallium with arsenic (GaAs) substrates, which are used for application in power amplifiers for wireless devices, and transistors and solar cells for drones. In addition, the company offers semi-conducting GaAs substrates that are used in opto-electronic products, including high brightness light emitting diodes in backlight wireless handsets and liquid crystal display televisions, as well as for automotive panel, signage, display, and lighting applications; and 3-D sensing using vertical cavity surface emitting lasers. Further, it provides germanium (Ge) substrates for space and terrestrial photovoltaic applications, as well as optical applications. Additionally, the company, through its subsidiaries and joint ventures, manufactures and sells raw materials, such as gallium, gallium alloys, InP poly-crystal, arsenic, Ge, Ge dioxide, high purity arsenic, pyrolytic boron nitride crucibles, and boron oxide. It sells its products through direct sales force in the United States, China, and Europe, as well as through independent sales representatives and distributors in Japan, Taiwan, Korea, and internationally. The company was formerly known as American Xtal Technology, Inc. and changed its name to AXT, Inc. in July 2000. AXT, Inc. was founded in 1986 and is headquartered in Fremont, California.

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