AXT (NASDAQ:AXTI) versus Power Integrations (NASDAQ:POWI) Critical Survey

AXT (NASDAQ:AXTI) and Power Integrations (NASDAQ:POWI) are both computer and technology companies, but which is the better business? We will contrast the two businesses based on the strength of their institutional ownership, analyst recommendations, dividends, earnings, profitability, risk and valuation.

Institutional and Insider Ownership

59.6% of AXT shares are held by institutional investors. Comparatively, 98.2% of Power Integrations shares are held by institutional investors. 8.1% of AXT shares are held by company insiders. Comparatively, 2.1% of Power Integrations shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Valuation & Earnings

This table compares AXT and Power Integrations’ top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
AXT $83.26 million 2.24 -$2.60 million ($0.07) -65.14
Power Integrations $420.67 million 8.38 $193.47 million $1.78 66.37

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

Risk and Volatility

AXT has a beta of 2.03, meaning that its stock price is 103% more volatile than the S&P 500. Comparatively, Power Integrations has a beta of 1.06, meaning that its stock price is 6% more volatile than the S&P 500.

Profitability

This table compares AXT and Power Integrations’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
AXT -2.00% -0.88% -0.76%
Power Integrations 45.82% 9.81% 8.75%

Analyst Recommendations

This is a summary of recent ratings for AXT and Power Integrations, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
AXT 0 1 2 0 2.67
Power Integrations 1 1 2 0 2.25

AXT currently has a consensus price target of $5.95, indicating a potential upside of 30.48%. Power Integrations has a consensus price target of $99.75, indicating a potential downside of 15.56%. Given AXT’s stronger consensus rating and higher probable upside, equities research analysts plainly believe AXT is more favorable than Power Integrations.

Summary

Power Integrations beats AXT on 9 of the 13 factors compared between the two stocks.

AXT Company Profile

AXT, Inc. researches, develops, and produces compound and single element semiconductor substrates. It produces 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, radio frequency amplifier and switching, infrared light-emitting diode (LEDs) motion control, and infrared thermal imaging. It also provides semi-insulating gallium arsenide (GaAs) substrates for applications in power amplifiers, direct broadcast television, transistors, satellite communications, and solar cells; and semi-conducting GaAs substrates that are used in 3-D sensing, data center communication, high brightness LEDs, lasers, near-infrared sensors, printer head lasers and LEDs, optical couplers, solar cells, and night vision goggles, as well as laser machining, cutting, and drilling. In addition, the company offers germanium (Ge) substrates for use in satellite solar cells, optical sensors and detectors, terrestrial concentrated photo voltaic cells, multi-junction solar cells for satellites, and infrared detectors. Further, it provides materials, including raw gallium, gallium alloys, InP poly-crystal, high purity gallium, arsenic, Ge, Ge dioxide, pyrolytic boron nitride crucibles, and boron oxide. AXT, Inc. sells its products through direct salesforce 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.

Power Integrations Company Profile

Power Integrations, Inc. designs, develops, and markets analog and mixed-signal integrated circuits (ICs), and other electronic components and circuitry used in high-voltage power conversion worldwide. The company offers a range of alternating current to direct current (DC) power conversion products that address power supply ranging from less than 1 watt of output to approximately 500 watts of output for mobile-device chargers, consumer appliances, utility meters, LCD monitors, main and standby power supplies for desktop computers and TVs, and other consumer and industrial applications, as well as light-emitting diode lighting. It also provides high-voltage diodes; and high-voltage gate-driver products under the SCALE and SCALE-2 product-family names. In addition, the company offers motor-driver ICs for use in refrigerator compressors, ceiling fans, air purifiers, pumps, fans and blowers, dishwashers, and laundry machines. It serves communications, computer, consumer, and industrial markets. The company sells its products to original equipment manufacturers and merchant power supply manufacturers through direct staff, as well as through a network of independent sales representatives and distributors. Power Integrations, Inc. was founded in 1988 and is headquartered in San Jose, California.

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