Broadcom (NASDAQ: AVGO) and Pixelworks (NASDAQ:PXLW) are both technology companies, but which is the better investment? We will contrast the two companies based on the strength of their earnings, profitability, dividends, analyst recommendations, valuation, risk and institutional ownership.

Analyst Ratings

This is a breakdown of current recommendations and price targets for Broadcom and Pixelworks, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Broadcom 0 1 31 1 3.00
Pixelworks 0 0 3 0 3.00

Broadcom currently has a consensus target price of $304.29, indicating a potential upside of 15.13%. Pixelworks has a consensus target price of $7.00, indicating a potential upside of 5.11%. Given Broadcom’s higher possible upside, analysts plainly believe Broadcom is more favorable than Pixelworks.

Volatility and Risk

Broadcom has a beta of 1.04, meaning that its share price is 4% more volatile than the S&P 500. Comparatively, Pixelworks has a beta of 0.6, meaning that its share price is 40% less volatile than the S&P 500.

Earnings and Valuation

This table compares Broadcom and Pixelworks’ top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Broadcom $17.64 billion 6.13 $1.69 billion $3.93 67.25
Pixelworks $53.39 million 4.27 -$11.10 million N/A N/A

Broadcom has higher revenue and earnings than Pixelworks.

Dividends

Broadcom pays an annual dividend of $7.00 per share and has a dividend yield of 2.6%. Pixelworks does not pay a dividend. Broadcom pays out 178.1% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Profitability

This table compares Broadcom and Pixelworks’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Broadcom 10.18% 28.64% 12.68%
Pixelworks -0.36% 20.65% 11.97%

Institutional & Insider Ownership

88.5% of Broadcom shares are held by institutional investors. Comparatively, 37.6% of Pixelworks shares are held by institutional investors. 3.6% of Broadcom shares are held by company insiders. Comparatively, 4.5% of Pixelworks 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.

Summary

Broadcom beats Pixelworks on 13 of the 15 factors compared between the two stocks.

About Broadcom

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.

About Pixelworks

Pixelworks, Inc. designs, develops and markets video and pixel processing semiconductors, intellectual property cores, software and custom application specific integrated circuit (ASIC) solutions for digital video applications. The Company is engaged in the design and development of integrated circuits (ICs) for use in electronic display devices. It provides its customers with software development tools and with software that provides basic functionality for its ICs and enables connectivity of its customers’ products. Its primary target markets include digital projection systems, Ultrabook devices, tablets and smartphones. Its video display processing technologies include Halo Free Motion Estimation and Motion Compensation (MEMC), Advanced Scaling, Mobile Video Display Processing, and Vuemagic and Networked Displays. Its primary video display processor product categories include ImageProcessor ICs, Video Co-Processor ICs and Networked Display ICs.

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