MagnaChip Semiconductor (NYSE: MX) and Inphi (NYSE:IPHI) are both small-cap computer and technology companies, but which is the better stock? We will contrast the two businesses based on the strength of their valuation, dividends, earnings, risk, profitability, analyst recommendations and institutional ownership.

Analyst Recommendations

This is a breakdown of recent ratings and recommmendations for MagnaChip Semiconductor and Inphi, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
MagnaChip Semiconductor 0 1 1 0 2.50
Inphi 0 3 10 0 2.77

MagnaChip Semiconductor presently has a consensus price target of $13.00, indicating a potential upside of 30.65%. Inphi has a consensus price target of $45.00, indicating a potential upside of 22.95%. Given MagnaChip Semiconductor’s higher possible upside, analysts clearly believe MagnaChip Semiconductor is more favorable than Inphi.

Institutional & Insider Ownership

89.5% of MagnaChip Semiconductor shares are held by institutional investors. 3.8% of MagnaChip Semiconductor shares are held by company insiders. Comparatively, 3.6% of Inphi shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Profitability

This table compares MagnaChip Semiconductor and Inphi’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
MagnaChip Semiconductor -1.24% N/A -6.37%
Inphi -16.27% 7.79% 3.55%

Risk & Volatility

MagnaChip Semiconductor has a beta of -0.32, meaning that its share price is 132% less volatile than the S&P 500. Comparatively, Inphi has a beta of 1.01, meaning that its share price is 1% more volatile than the S&P 500.

Valuation and Earnings

This table compares MagnaChip Semiconductor and Inphi’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
MagnaChip Semiconductor $687.97 million 0.49 -$29.61 million ($0.46) -21.63
Inphi $266.28 million 5.85 $99.45 million ($1.36) -26.91

Inphi has lower revenue, but higher earnings than MagnaChip Semiconductor. Inphi is trading at a lower price-to-earnings ratio than MagnaChip Semiconductor, indicating that it is currently the more affordable of the two stocks.

MagnaChip Semiconductor Company Profile

MagnaChip Semiconductor Corporation is a designer and manufacturer of analog and mixed-signal semiconductor products for consumer, computing, communication, industrial, automotive and Internet of Things (IoT) applications. The Company provides technology platforms for analog, mixed signal, power, high voltage, non-volatile memory and Radio Frequency (RF) applications. The Company has two segments: Foundry Services Group and Standard Products Group. The Company’s Foundry Services Group provides analog and mixed-signal foundry services to semiconductor companies and Integrated Device Manufacturers (IDMs) that serve consumer, computing, communication, industrial, automotive and IoT applications. The Company manufactures wafers-based on its customers’ product designs. The Company’s Standard Products Group includes its Display Solutions and Power Solutions business lines.

Inphi Company Profile

Inphi Corporation is a provider of analog and mixed signal semiconductor solutions for the communications and datacenter markets. The Company’s solutions provide an interface between analog signals and digital information in systems, such as telecommunications transport systems, enterprise networking equipment and datacenters. It is engaged in the design, development and sale of analog connectivity components that operate to maintain, amplify and manage signal integrity at high speeds in a range of applications. Its semiconductor solutions are designed to address bandwidth bottlenecks in networks and enable the rollout of communications and datacenter infrastructures. The Company provides 25 gigabit (G) to 600G high-speed analog semiconductor solutions for the communications market. As of December 31, 2016, the Company’s product portfolio included products that had commercially shipped, products for which the Company had shipped engineering samples and products under development.

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