Analyzing Lenovo Group (OTCMKTS:LNVGY) and Super Micro Computer (NASDAQ:SMCI)

Super Micro Computer (NASDAQ:SMCI) and Lenovo Group (OTCMKTS:LNVGY) are both large-cap technology companies, but which is the better stock? We will compare the two businesses based on the strength of their earnings, dividends, analyst recommendations, valuation, profitability, risk and institutional ownership.

Risk and Volatility

Super Micro Computer has a beta of 2, suggesting that its share price is 100% more volatile than the S&P 500. Comparatively, Lenovo Group has a beta of 1.15, suggesting that its share price is 15% more volatile than the S&P 500.

Insider and Institutional Ownership

84.1% of Super Micro Computer shares are held by institutional investors. Comparatively, 0.1% of Lenovo Group shares are held by institutional investors. 16.1% of Super Micro Computer shares are held by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.

Analyst Recommendations

This is a summary of recent ratings and recommmendations for Super Micro Computer and Lenovo Group, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Super Micro Computer	2	11	4	1	2.22
Lenovo Group	0	2	0	0	2.00

Super Micro Computer presently has a consensus target price of $42.13, suggesting a potential upside of 6.42%. Given Super Micro Computer’s stronger consensus rating and higher probable upside, analysts plainly believe Super Micro Computer is more favorable than Lenovo Group.

Profitability

This table compares Super Micro Computer and Lenovo Group’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Super Micro Computer	5.71%	27.83%	9.11%
Lenovo Group	0.88%	34.51%	5.14%

Earnings and Valuation

This table compares Super Micro Computer and Lenovo Group”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Super Micro Computer	$39.06 billion	0.67	$2.23 billion	$3.20	12.37
Lenovo Group	$83.08 billion	0.63	$1.91 billion	$1.03	81.41

Super Micro Computer has higher earnings, but lower revenue than Lenovo Group. Super Micro Computer is trading at a lower price-to-earnings ratio than Lenovo Group, indicating that it is currently the more affordable of the two stocks.

Summary

Super Micro Computer beats Lenovo Group on 12 of the 15 factors compared between the two stocks.

About Super Micro Computer

Super Micro Computer, Inc., together with its subsidiaries, develops and manufactures high performance server and storage solutions based on modular and open architecture in the United States, Europe, Asia, and internationally. Its solutions range from complete server, storage systems, modular blade servers, blades, workstations, full racks, networking devices, server sub-systems, server management software, and security software. The company provides application-optimized server solutions, rackmount and blade servers, storage, and subsystems and accessories; and server software management solutions, such as Server Management Suite, including Supermicro Server Manager, Supermicro Power Management software, Supermicro Update Manager, SuperCloud Composer, and SuperDoctor 5. In addition, it offers server subsystems and accessories comprising server boards, chassis, power supplies, and other accessories. Further, the company provides server and storage system integration, configuration, and software upgrade and update services; and technical documentation services, as well as identifies service requirements, creates and executes project plans, and conducts verification testing and technical documentation, and training services. Additionally, it offers help desk and on-site product support services for its server and storage systems; and customer support services, including ongoing maintenance and technical support for its products. The company provides its products to enterprise data centers, cloud computing, artificial intelligence, and 5G and edge computing markets. It sells its products through direct and indirect sales force, distributors, value-added resellers, system integrators, and original equipment manufacturers. The company was incorporated in 1993 and is headquartered in San Jose, California.

About Lenovo Group

Lenovo Group Limited, an investment holding company, develops, manufactures, and markets technology products and services. It operates through Intelligent Devices Group, Infrastructure Solutions Group, and Solutions and Services Group segments. The company offers commercial and consumer personal computers, as well as servers and workstations; and a family of mobile Internet devices, including tablets and smartphones. In addition, it provides laptops, monitors, accessories, smart home and collaboration solutions, augmented and virtual reality, commercial internet of things, and smart infrastructure data center solutions. Further, the company manufactures and distributes IT products, computers, computer hardware, and peripheral equipment; and offers IT, business planning, management, supply chain, finance, administration support, procurement agency, data management, intellectual property, and investment management services. Additionally, it is involved in the retail and service business for consumer electronic products and related digital services; development, ownership, licensing, and sale of communications hardware and software; and develops software and applications. Furthermore, the company distributes smartphone, tablet, server, and storage. It operates in China, the Asia Pacific, Europe, the Middle East, Africa, and the Americas. Lenovo Group Limited was founded in 1984 and is headquartered in Quarry Bay, Hong Kong.