Head-To-Head Analysis: Universal Display (NASDAQ:OLED) & Microchip Technology (NASDAQ:MCHP)

Microchip Technology (NASDAQ:MCHP) and Universal Display (NASDAQ:OLED) are both technology companies, but which is the superior business? We will contrast the two companies based on the strength of their valuation, earnings, profitability, dividends, analyst recommendations, risk and institutional ownership.

Profitability

This table compares Microchip Technology and Universal Display’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Microchip Technology	14.96%	20.32%	9.18%
Universal Display	36.74%	12.20%	10.90%

Institutional and Insider Ownership

91.5% of Microchip Technology shares are owned by institutional investors. Comparatively, 78.2% of Universal Display shares are owned by institutional investors. 1.8% of Microchip Technology shares are owned by company insiders. Comparatively, 2.2% of Universal Display shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Dividends

Microchip Technology pays an annual dividend of $1.82 per share and has a dividend yield of 3.0%. Universal Display pays an annual dividend of $2.00 per share and has a dividend yield of 2.2%. Microchip Technology pays out 137.9% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Universal Display pays out 40.6% of its earnings in the form of a dividend. Microchip Technology has raised its dividend for 23 consecutive years and Universal Display has raised its dividend for 8 consecutive years. Microchip Technology is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Earnings & Valuation

This table compares Microchip Technology and Universal Display”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Microchip Technology	$4.71 billion	7.12	$230.00 million	$1.32	46.73
Universal Display	$627.73 million	6.40	$242.07 million	$4.93	18.11

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

Analyst Ratings

This is a breakdown of current recommendations for Microchip Technology and Universal Display, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Microchip Technology	0	7	14	3	2.83
Universal Display	1	4	3	0	2.25

Microchip Technology currently has a consensus target price of $90.18, indicating a potential upside of 46.21%. Universal Display has a consensus target price of $114.00, indicating a potential upside of 27.67%. Given Microchip Technology’s stronger consensus rating and higher probable upside, analysts clearly believe Microchip Technology is more favorable than Universal Display.

Volatility and Risk

Microchip Technology has a beta of 1.84, suggesting that its share price is 84% more volatile than the S&P 500. Comparatively, Universal Display has a beta of 1.51, suggesting that its share price is 51% more volatile than the S&P 500.

Summary

Microchip Technology beats Universal Display on 12 of the 18 factors compared between the two stocks.

About Microchip Technology

Microchip Technology is a semiconductor company that develops and supplies components and systems for embedded control and connected applications. Its products include microcontrollers, microprocessors, analog and power-management devices, field-programmable gate arrays, timing products, and connectivity and security solutions. The company’s products are used in a range of markets, including automotive, industrial, communications, data center, consumer, and aerospace and defense. Microchip also provides development tools, software, and technical support to help customers design and build electronic systems.

About Universal Display

Universal Display Corporation develops and commercializes technologies and materials used in organic light-emitting diode (OLED) displays and lighting. Its business focuses on licensing its OLED-related intellectual property and selling proprietary OLED materials to manufacturers and other industry participants. The company is known for its phosphorescent OLED technology, marketed as UniversalPHOLED, which enables OLED devices to produce light efficiently. Its offerings include phosphorescent emitter materials and related technologies, supported by ongoing research and development.