Head to Head Contrast: Semtech (NASDAQ:SMTC) vs. Transphorm (OTCMKTS:TGAN)

Transphorm (OTCMKTS:TGAN) and Semtech (NASDAQ:SMTC) are both technology companies, but which is the better stock? We will compare the two companies based on the strength of their profitability, valuation, analyst recommendations, earnings, institutional ownership, risk and dividends.

Analyst Ratings

This is a summary of current ratings and target prices for Transphorm and Semtech, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Transphorm	0	0	0	0	0.00
Semtech	1	3	13	1	2.78

Semtech has a consensus price target of $189.07, indicating a potential upside of 60.29%. Given Semtech’s stronger consensus rating and higher probable upside, analysts plainly believe Semtech is more favorable than Transphorm.

Risk and Volatility

Transphorm has a beta of 0.57, meaning that its share price is 43% less volatile than the S&P 500. Comparatively, Semtech has a beta of 2.31, meaning that its share price is 131% more volatile than the S&P 500.

Institutional and Insider Ownership

66.4% of Transphorm shares are held by institutional investors. 2.5% of Transphorm shares are held by insiders. Comparatively, 0.4% of Semtech shares are held by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.

Earnings and Valuation

This table compares Transphorm and Semtech”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Transphorm	$18.75 million	16.85	-$30.60 million	($0.69)	-7.39
Semtech	$1.09 billion	10.08	-$40.38 million	($0.39)	-302.44

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

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Transphorm	-189.65%	-114.30%	-65.96%
Semtech	-3.05%	18.31%	7.25%

Summary

Semtech beats Transphorm on 10 of the 15 factors compared between the two stocks.

About Transphorm

Transphorm, Inc., a semiconductor company, develops, manufactures, and sells gallium nitride (GaN) semiconductor components for high voltage power conversion applications in Mainland China, Hong Kong, Taiwan, the United States, Japan, South Korea, India, and Europe. The company's products include GaN field effect transistors in various packages. Its GaN devices allows customers to design power systems creating functional value in various end products, including smartphone power adapters/fast-chargers, power supplies for datacenter servers/communication, industrial power converters, chargers/converters/inverters for electric vehicles, and other applications. The company offers its products through regional distributors and sales representatives. Transphorm, Inc. was founded in 2007 and is headquartered in Goleta, California.

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.