Microsemi Communications (NASDAQ: VTSS) and SemiLEDS Corporation (NASDAQ:LEDS) are both small-cap integrated circuits companies, but which is the better business? We will compare the two businesses based on the strength of their risk, earnings, profitability, dividends, valuation, analyst recommendations and institutional ownership.

Analyst Recommendations

This is a breakdown of current ratings and recommmendations for Microsemi Communications and SemiLEDS Corporation, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Microsemi Communications 0 0 0 0 N/A
SemiLEDS Corporation 0 0 0 0 N/A

Profitability

This table compares Microsemi Communications and SemiLEDS Corporation’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Microsemi Communications -20.36% -69.40% -23.46%
SemiLEDS Corporation -182.84% -59.70% -30.13%

Institutional & Insider Ownership

2.1% of SemiLEDS Corporation shares are held by institutional investors. 40.1% of SemiLEDS Corporation shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.

Earnings and Valuation

This table compares Microsemi Communications and SemiLEDS Corporation’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio NetIncome Earnings Per Share Price/Earnings Ratio
Microsemi Communications N/A N/A N/A ($0.28) -18.86
SemiLEDS Corporation $10.14 million 0.86 -$21.27 million ($5.04) -0.49

Microsemi Communications has higher revenue, but lower earnings than SemiLEDS Corporation. Microsemi Communications is trading at a lower price-to-earnings ratio than SemiLEDS Corporation, indicating that it is currently the more affordable of the two stocks.

Risk & Volatility

Microsemi Communications has a beta of 1.9, meaning that its stock price is 90% more volatile than the S&P 500. Comparatively, SemiLEDS Corporation has a beta of 2.26, meaning that its stock price is 126% more volatile than the S&P 500.

Summary

SemiLEDS Corporation beats Microsemi Communications on 5 of the 8 factors compared between the two stocks.

About Microsemi Communications

Vitesse Semiconductor Corporation supplies high-performance integrated circuits used by manufacturers of networking systems for Carrier and Enterprise networking applications. The Company designs, develops and markets a diverse networking and connectivity IC solutions. The Company develops and manufactures variety of products that are marketed to Carrier and Enterprise networking, as well as data center infrastructure original equipment manufacturers. The Company’s product lines include Ethernet Switching Product Line that addresses Gigabit Ethernet and 10 Gigabit Ethernet applications in Carrier and Enterprise markets; Connectivity Product Line includes mixed-signal physical layer devices for connection of systems via optical fiber, copper cable, or backplanes and Transport Processing Product Line addresses the needs of Carrier network providers as they undergo a migration to new Ethernet packet-based networks.

About SemiLEDS Corporation

SemiLEDs Corporation develops, manufactures and sells light emitting diode (LED) chips and LED components. The Company’s products are used primarily for general lighting applications, including street lights and commercial, industrial and residential lighting. Its LED chips may also be used in specialty industrial applications, such as ultraviolet (UV), curing of polymers, LED light therapy in medical/cosmetic applications, counterfeit detection, LED lighting for horticulture applications, architectural lighting and entertainment lighting. The Company produces a range of blue, white, green and UV LED chips, including its Enhanced Vertical (EV) LED product series, ranging from chip sizes of approximately 380 microns (um) by 380um to 1,520um by 1,520um. It designs, assembles and sells lighting fixtures and systems for general lighting applications, including commercial, residential and industrial lighting. Its lighting products consist primarily of LED luminaries and LED retrofits.

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