Critical Contrast: Pixelworks (NASDAQ:PXLW) and Dropbox (NASDAQ:DBX)

Dropbox (NASDAQ:DBX) 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 analyst recommendations, institutional ownership, dividends, risk, profitability, valuation and earnings.

Insider and Institutional Ownership

94.8% of Dropbox shares are owned by institutional investors. Comparatively, 21.4% of Pixelworks shares are owned by institutional investors. 35.5% of Dropbox shares are owned by insiders. Comparatively, 4.7% of Pixelworks shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Dropbox	17.49%	-24.26%	15.88%
Pixelworks	N/A	-28.77%	-14.64%

Earnings & Valuation

This table compares Dropbox and Pixelworks”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Dropbox	$2.52 billion	3.38	$508.40 million	$1.80	20.97
Pixelworks	$690,000.00	58.57	-$22.50 million	($1.63)	-4.10

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

Risk and Volatility

Dropbox has a beta of 0.65, suggesting that its stock price is 35% less volatile than the S&P 500. Comparatively, Pixelworks has a beta of 1.52, suggesting that its stock price is 52% more volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of current ratings and target prices for Dropbox and Pixelworks, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Dropbox	3	4	1	0	1.75
Pixelworks	1	0	2	0	2.33

Dropbox currently has a consensus target price of $30.75, indicating a potential downside of 18.52%. Pixelworks has a consensus target price of $16.00, indicating a potential upside of 139.52%. Given Pixelworks’ stronger consensus rating and higher possible upside, analysts plainly believe Pixelworks is more favorable than Dropbox.

Summary

Dropbox beats Pixelworks on 9 of the 14 factors compared between the two stocks.

About Dropbox

Dropbox, Inc. provides a content collaboration platform worldwide. The company's platform allows individuals, families, teams, and organizations to collaborate and sign up for free through its website or app, as well as upgrade to a paid subscription plan for premium features. It serves customers in professional services, technology, media, education, industrial, consumer and retail, and financial services industries. The company was formerly known as Evenflow, Inc. and changed its name to Dropbox, Inc. in October 2009. Dropbox, Inc. was incorporated in 2007 and is headquartered in San Francisco, California.

About Pixelworks

Pixelworks, Inc., together with its subsidiaries, develops and markets semiconductor and software solutions for mobile, home and enterprise, and cinema markets in the United States, Japan, China, Taiwan, Korea, and Europe. The company offers imageprocessor integrated circuits, such as embedded microprocessors, digital signal processing technology, and software that control the operations and signal processing within high-end display systems; visual processor integrated circuits that works with a mobile application processor; and transcoder integrated circuits which includes software that control the operations and signal processing for converting multiple bitrates, resolutions and codecs to provide bandwidth efficient video transmissions based on industry standard protocols. It also provides software and platform licensing products comprising Pixelworks Pro Software, a software that enables development and customize the look and feel of mobile products by use of various features, such as absolute color accuracy, HDR tone mapping, SDR-to-HDR conversion, and others; and TrueCut Motion Platform, content creation tool which provides the ability to dial in a motion look on a shot-by-shot basis. The company distributes its products to integrators, branded manufacturers, and branded suppliers. Pixelworks, Inc. was founded in 1997 and is based in Portland, Oregon.