Financial Comparison: Power Integrations (NASDAQ:POWI) and NVE (NASDAQ:NVEC)

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

Volatility and Risk

Power Integrations has a beta of 1.31, indicating that its stock price is 31% more volatile than the S&P 500. Comparatively, NVE has a beta of 1.09, indicating that its stock price is 9% more volatile than the S&P 500.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Power Integrations	7.69%	4.48%	4.07%
NVE	58.33%	23.21%	22.71%

Dividends

Power Integrations pays an annual dividend of $0.84 per share and has a dividend yield of 1.7%. NVE pays an annual dividend of $4.00 per share and has a dividend yield of 5.5%. Power Integrations pays out 129.2% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. NVE pays out 128.6% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Power Integrations has increased its dividend for 12 consecutive years. NVE is clearly the better dividend stock, given its higher yield and lower payout ratio.

Analyst Ratings

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

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Power Integrations	0	2	4	1	2.86
NVE	0	0	0	0	0.00

Power Integrations currently has a consensus target price of $74.67, indicating a potential upside of 47.45%. Given Power Integrations’ stronger consensus rating and higher probable upside, analysts plainly believe Power Integrations is more favorable than NVE.

Institutional and Insider Ownership

65.9% of NVE shares are owned by institutional investors. 1.4% of Power Integrations shares are owned by insiders. Comparatively, 1.9% of NVE shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Valuation and Earnings

This table compares Power Integrations and NVE”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Power Integrations	$432.81 million	6.59	$32.23 million	$0.65	77.91
NVE	$25.87 million	13.66	$17.12 million	$3.11	23.50

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

About Power Integrations

Power Integrations, Inc. designs, develops, manufactures, and markets analog and mixed-signal integrated circuits (ICs), and other electronic components and circuitry used in high-voltage power conversion worldwide. The company provides a range of alternating current to direct current power conversion products that address power supply ranging from less than one 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, LED lighting, and various other consumer and industrial applications, as well as power conversion in high-power applications comprising industrial motors, solar and wind-power systems, electric vehicles, and high-voltage DC transmission systems. It also offers high-voltage diodes; InnoSwitch IC for electric vehicles; high-voltage gate-driver products used to operate high-voltage switches, such as insulated-gate bipolar transistors and silicon-carbide MOSFETs under the SCALE and SCALE-2 product-family names; and SCALE-iDriver for use in powertrain and charging applications for electric vehicles. In addition, the company provides motor-driver ICs for use in refrigerator compressors, ceiling fans, and air purifiers, as well as pumps, fans, and blowers used in consumer appliances, such as 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 sales staff, as well as a network of independent sales representatives and distributors. Power Integrations, Inc. was incorporated in 1988 and is headquartered in San Jose, California.

About NVE

NVE Corporation develops and sells devices that use spintronics, a nanotechnology that relies on electron spin to acquire, store, and transmit information in the United States and internationally. 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, rotation, or speed for the factory automation market; and custom and medical sensors for medical devices to replace electromechanical magnetic switches. The company also offers spintronic couplers for power conversion and industrial Internet of Things (IIoT) market; and DC-to-DC convertors for use in power conversion systems and industrial networks for the IIoT. In addition, it undertakes contracts for research and development, and licensing of spintronic magnetoresistive random access memory technology. NVE Corporation was founded in 1989 and is headquartered in Eden Prairie, Minnesota.