Semtech (NASDAQ:SMTC) & Arteris (NASDAQ:AIP) Critical Analysis

Semtech (NASDAQ:SMTC) and Arteris (NASDAQ:AIP) are both computer and technology companies, but which is the superior investment? We will compare the two businesses based on the strength of their institutional ownership, earnings, dividends, profitability, risk, valuation and analyst recommendations.

Risk & Volatility

Semtech has a beta of 1.85, suggesting that its share price is 85% more volatile than the S&P 500. Comparatively, Arteris has a beta of 1.03, suggesting that its share price is 3% more volatile than the S&P 500.

Insider and Institutional Ownership

64.4% of Arteris shares are owned by institutional investors. 1.2% of Semtech shares are owned by insiders. Comparatively, 36.1% of Arteris shares are owned by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Valuation and Earnings

This table compares Semtech and Arteris’ top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Semtech	$868.76 million	2.43	-$1.09 billion	($17.01)	-1.92
Arteris	$53.67 million	5.06	-$36.87 million	($1.04)	-6.90

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

Profitability

This table compares Semtech and Arteris’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Semtech	-125.70%	-9.41%	-1.32%
Arteris	-68.70%	-150.71%	-34.46%

Analyst Ratings

This is a breakdown of current recommendations for Semtech and Arteris, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Semtech	0	1	11	0	2.92
Arteris	0	0	4	0	3.00

Semtech currently has a consensus target price of $39.35, suggesting a potential upside of 20.56%. Arteris has a consensus target price of $16.00, suggesting a potential upside of 122.84%. Given Arteris’ stronger consensus rating and higher possible upside, analysts plainly believe Arteris is more favorable than Semtech.

Summary

Arteris beats Semtech on 8 of the 13 factors compared between the two stocks.

About Semtech

Semtech Corporation designs, develops, manufactures, and markets analog and mixed-signal semiconductor products and advanced algorithms. It provides signal integrity products, including a portfolio of optical data communications and video transport products used in various infrastructure, and industrial applications; a portfolio of integrated circuits for data centers, enterprise networks, passive optical networks, wireless base station optical transceivers, and high-speed interface applications; and video products for broadcast applications, as well as video-over-IP technology for professional audio video applications. The company offers protection products, such as filter and termination devices that are integrated with the transient voltage suppressor devices, which protect electronic systems from voltage spikes; and sensing products comprising a portfolio of specialized radio frequency products used in various industrial, medical, and communications applications, as well as specialized sensing products used in industrial and consumer applications. In addition, it provides switching voltage regulators, combination switching and linear regulators, smart regulators, isolated switches, and wireless charging related products. The company serves original equipment manufacturers and industrial end-markets. It sells its products directly, as well as through independent sales representative firms and independent distributors in Asia- Pacific, North America, and Europe. The company was incorporated in 1960 and is headquartered in Camarillo, California.

About Arteris

Arteris, Inc. provides semiconductor interconnect intellectual property (IP) and System-on-Chip (Soc) Integration Automation software solutions (SIA) in the Americas, the Asia Pacific, Europe, and the Middle East. The company develops, licenses, and supports the on-chip interconnect fabric technology used in Soc designs and Network-on-Chip (NoC) interconnect IP. Its products include FlexNoC and FlexWay silicon-proven interconnect IP products; Ncore, a silicon-proven and cache coherent interconnect IP product that provides scalable, configurable, and area efficient characteristics; and CodaCache, a last-level cache semiconductor IP product. The company also offers SIA products comprising Magillem Connectivity that shortens and streamlines the SoC integration process; and Magillem Registers and CSRCompiler that addresses hardware-software integration challenges for SoCs. The company serves semiconductor manufacturers, original equipment manufacturers, hyperscale system houses, semiconductor design houses, and other producers of electronic systems. Arteris, Inc. was founded in 2003 and is headquartered in Campbell, California.