Tower Semiconductor (TSEM) and NVE (NVEC) Critical Analysis

Tower Semiconductor (NASDAQ:TSEM) and NVE (NASDAQ:NVEC) are both small-cap computer and technology companies, but which is the better investment? We will compare the two businesses based on the strength of their dividends, valuation, profitability, earnings, risk, institutional ownership and analyst recommendations.

Analyst Recommendations

This is a breakdown of current ratings and price targets for Tower Semiconductor and NVE, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Tower Semiconductor 0 0 7 0 3.00
NVE 0 0 0 0 N/A

Tower Semiconductor presently has a consensus price target of $26.50, suggesting a potential upside of 68.36%. Given Tower Semiconductor’s higher possible upside, research analysts clearly believe Tower Semiconductor is more favorable than NVE.

Dividends

NVE pays an annual dividend of $4.00 per share and has a dividend yield of 4.2%. Tower Semiconductor does not pay a dividend.

Earnings & Valuation

This table compares Tower Semiconductor and NVE’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Tower Semiconductor $1.39 billion 1.12 $298.01 million $2.21 7.12
NVE $29.86 million 15.38 $13.91 million N/A N/A

Tower Semiconductor has higher revenue and earnings than NVE.

Profitability

This table compares Tower Semiconductor and NVE’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Tower Semiconductor 18.43% 15.82% 9.98%
NVE 52.49% 18.42% 18.20%

Volatility and Risk

Tower Semiconductor has a beta of 1.44, suggesting that its stock price is 44% more volatile than the S&P 500. Comparatively, NVE has a beta of 1.29, suggesting that its stock price is 29% more volatile than the S&P 500.

Institutional and Insider Ownership

46.6% of Tower Semiconductor shares are held by institutional investors. Comparatively, 78.2% of NVE shares are held by institutional investors. 1.0% of Tower Semiconductor shares are held by insiders. Comparatively, 2.4% of NVE shares are held by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company will outperform the market over the long term.

Summary

NVE beats Tower Semiconductor on 8 of the 13 factors compared between the two stocks.

About Tower Semiconductor

Tower Semiconductor Ltd., an independent semiconductor foundry, manufactures and markets analog intensive mixed-signal semiconductor devices in the United States, Japan, Asia, and Europe. The company provides various customizable process technologies, including SiGe, BiCMOS, mixed-signal/CMOS, RF CMOS, CMOS image sensor, integrated power management, and MEMS. It also offers transfer optimization and development process services to integrated device manufacturers and fabless companies. The company serves various markets, such as automotive, medical, industrial, consumer, aerospace and defense, and others. Tower Semiconductor Ltd. was founded in 1993 and is headquartered in Migdal Haemek, Israel.

About NVE

NVE Corporation develops and sells devices that use spintronics, a nanotechnology that utilizes electron spin to acquire, store, and transmit information. The company manufactures spintronic products, including sensors and couplers for use in acquiring and transmitting data. Its products comprise standard sensors to detect the presence of a magnetic or metallic material to determine position or speed primarily for the factory automation market; and custom and medical sensors for medical devices to replace electromechanical magnetic switches. The company also offers spintronic couplers, such as IL500-series couplers, IL600-series passive-input couplers, IL700/IL200-series high-speed couplers, IL4/IL3-series isolated network couplers, and IL800-series top-of-the-line couplers. In addition, it licenses the spintronic magnetoresistive random access memory technology, as well as conducts contract research and development activities. The company sells its products through distributors in the United States, Europe, the Middle East, Africa, Asia-Pacific, and internationally. NVE Corporation was founded in 1989 and is headquartered in Eden Prairie, Minnesota.

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