Applied Micro Circuits (NASDAQ: AMCC) and Broadcom Limited (NASDAQ:AVGO) are both technology companies, but which is the superior stock? We will compare the two companies based on the strength of their valuation, earnings, risk, dividends, institutional ownership, analyst recommendations and profitability.

Profitability

This table compares Applied Micro Circuits and Broadcom Limited’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Applied Micro Circuits -11.11% -16.63% -13.04%
Broadcom Limited 3.12% 26.82% 11.96%

Institutional & Insider Ownership

73.3% of Applied Micro Circuits shares are held by institutional investors. Comparatively, 90.0% of Broadcom Limited shares are held by institutional investors. 12.4% of Applied Micro Circuits shares are held by company insiders. Comparatively, 3.6% of Broadcom Limited shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Dividends

Broadcom Limited pays an annual dividend of $4.08 per share and has a dividend yield of 1.6%. Applied Micro Circuits does not pay a dividend. Broadcom Limited pays out 348.7% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Volatility and Risk

Applied Micro Circuits has a beta of 1.81, meaning that its stock price is 81% more volatile than the S&P 500. Comparatively, Broadcom Limited has a beta of 1.07, meaning that its stock price is 7% more volatile than the S&P 500.

Earnings and Valuation

This table compares Applied Micro Circuits and Broadcom Limited’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Applied Micro Circuits N/A N/A N/A ($0.38) -22.24
Broadcom Limited $16.93 billion 5.96 $6.99 billion $1.17 211.75

Broadcom Limited has higher revenue and earnings than Applied Micro Circuits. Applied Micro Circuits is trading at a lower price-to-earnings ratio than Broadcom Limited, indicating that it is currently the more affordable of the two stocks.

Analyst Ratings

This is a breakdown of current ratings and recommmendations for Applied Micro Circuits and Broadcom Limited, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Applied Micro Circuits 0 5 0 0 2.00
Broadcom Limited 0 1 29 1 3.00

Applied Micro Circuits presently has a consensus target price of $8.00, indicating a potential downside of 5.33%. Broadcom Limited has a consensus target price of $272.53, indicating a potential upside of 10.01%. Given Broadcom Limited’s stronger consensus rating and higher probable upside, analysts clearly believe Broadcom Limited is more favorable than Applied Micro Circuits.

Summary

Broadcom Limited beats Applied Micro Circuits on 11 of the 14 factors compared between the two stocks.

About Applied Micro Circuits

Applied Micro Circuits Corporation (AMCC) provides silicon solutions for cloud infrastructure and data centers, as well as connectivity products for edge, metro and long haul communications equipment. The Company’s products serve Computing and Connectivity markets. Its Computing products include the X-Gene family of server processors, based on the ARMv8 64-bit Instruction Set Architecture (ISA), which target mainstream cloud and data center infrastructure, including hyperscale, telco, enterprise and high performance computing. It also offers embedded computing products, which include HeliX family of processors, based on the ARM 64-bit ISA and its PowerPC products, based on Power Architecture. Its embedded Computing products are deployed in various applications, including networking and telecom, enterprise storage and industrial applications. The Connectivity business includes X-Weave family of products for service providers and public cloud, private cloud and enterprise data centers.

About Broadcom Limited

Broadcom Limited is a designer, developer and global supplier of a range of semiconductor devices with a focus on digital and mixed signal complementary metal oxide semiconductor (CMOS)-based devices and analog III-V based products. The Company operates through four segments: Wired Infrastructure, Wireless Communications, Enterprise Storage, and Industrial & Other. It offers a range of products that are used in end-products, such as enterprise and data center networking, home connectivity, set-top boxes (STBs), broadband access, telecommunication equipment, smartphones, data center servers and storage systems, factory automation, power generation and alternative energy systems, and electronic displays. Its product portfolio ranges from discrete devices to complex sub-systems that include multiple device types, and also includes firmware for interfacing between analog and digital systems. Its products include mechanical hardware that interfaces with optoelectronic or capacitive sensors.

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