Semtech (NASDAQ:SMTC – Get Free Report) and Ambarella (NASDAQ:AMBA – Get Free Report) are both mid-cap computer and technology companies, but which is the better investment? We will contrast the two businesses based on the strength of their valuation, earnings, dividends, profitability, risk, institutional ownership and analyst recommendations.
Institutional and Insider Ownership
82.1% of Ambarella shares are owned by institutional investors. 0.6% of Semtech shares are owned by insiders. Comparatively, 5.7% of Ambarella 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.
Profitability
This table compares Semtech and Ambarella’s net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| Semtech | -107.21% | -154.99% | -2.40% |
| Ambarella | -79.46% | -26.01% | -22.28% |
Earnings & Valuation
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| Semtech | $815.31 million | 4.32 | -$1.09 billion | ($13.55) | -3.46 |
| Ambarella | $220.41 million | 11.01 | -$169.42 million | ($4.26) | -13.90 |
Ambarella has lower revenue, but higher earnings than Semtech. Ambarella is trading at a lower price-to-earnings ratio than Semtech, indicating that it is currently the more affordable of the two stocks.
Risk and Volatility
Semtech has a beta of 1.54, suggesting that its stock price is 54% more volatile than the S&P 500. Comparatively, Ambarella has a beta of 1.62, suggesting that its stock price is 62% more volatile than the S&P 500.
Analyst Ratings
This is a breakdown of current ratings and price targets for Semtech and Ambarella, as reported by MarketBeat.com.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| Semtech | 0 | 2 | 10 | 0 | 2.83 |
| Ambarella | 1 | 3 | 7 | 0 | 2.55 |
Semtech presently has a consensus target price of $52.60, indicating a potential upside of 12.30%. Ambarella has a consensus target price of $74.09, indicating a potential upside of 25.11%. Given Ambarella’s higher probable upside, analysts clearly believe Ambarella is more favorable than Semtech.
Summary
Ambarella beats Semtech on 9 of the 14 factors compared between the two stocks.
About Semtech
Semtech Corporation designs, develops, manufactures, and markets analog and mixed-signal semiconductor 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. In addition, it provides switching voltage regulators, combination switching and linear regulators, smart regulators, isolated switches, and wireless charging related products. Further, it offers portfolio of IoT solutions, such as modules, gateways, routers, and connected services; and portfolio of connected services, including wireless connectivity and cloud-based services for industrial, medical and communications applications. 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. Semtech Corporation was incorporated in 1960 and is headquartered in Camarillo, California.
About Ambarella
Ambarella, Inc. develops semiconductor solutions that enable high-definition (HD) and ultra HD compression, image signal processing, and artificial intelligence processing worldwide. The company's system-on-a-chip designs integrated HD video processing, image processing, artificial intelligence computer vision algorithms, audio processing, and system functions onto a single chip for delivering video and image quality, differentiated functionality, and low power consumption. Its solutions are used in automotive cameras, such as automotive video recorders, electronic mirrors, front advanced driver assistance system camera, cabin monitoring system and driver monitoring system camera, and central domain controllers for autonomous vehicle; enterprise and public class, and home security camera; and robotics and industrial application, including identification/authentication cameras, robotic products, and sensing cameras, as well as cameras for the enterprise, home, public spaces, and consumer leisure comprising wearable body cameras, sports action cameras, social media cameras, drones for capturing aerial video or photographs, video conferencing, and virtual reality applications. The company sells its solutions to original design manufacturers and original equipment manufacturers through its direct sales force and distributors. Ambarella, Inc. was incorporated in 2004 and is headquartered in Santa Clara, California.
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