Critical Review: Super Micro Computer (NASDAQ:SMCI) vs. Canon (OTCMKTS:CAJPY)

Canon (OTCMKTS:CAJPY) and Super Micro Computer (NASDAQ:SMCI) are both large-cap technology companies, but which is the superior business? We will contrast the two businesses based on the strength of their institutional ownership, valuation, dividends, analyst recommendations, earnings, profitability and risk.

Risk and Volatility

Canon has a beta of 0.52, indicating that its stock price is 48% less volatile than the S&P 500. Comparatively, Super Micro Computer has a beta of 1.95, indicating that its stock price is 95% more volatile than the S&P 500.

Analyst Ratings

This is a breakdown of current recommendations for Canon and Super Micro Computer, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Canon	0	1	0	0	2.00
Super Micro Computer	2	12	4	0	2.11

Super Micro Computer has a consensus price target of $42.13, suggesting a potential upside of 5.76%. Given Super Micro Computer’s stronger consensus rating and higher possible upside, analysts plainly believe Super Micro Computer is more favorable than Canon.

Institutional and Insider Ownership

84.1% of Super Micro Computer shares are owned by institutional investors. 0.0% of Canon shares are owned by insiders. Comparatively, 16.1% of Super Micro Computer shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company is poised for long-term growth.

Valuation and Earnings

This table compares Canon and Super Micro Computer”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Canon	$29.46 billion	0.87	$2.22 billion	$2.54	11.48
Super Micro Computer	$39.06 billion	0.61	$1.05 billion	$3.20	12.45

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

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Canon	7.36%	9.33%	5.51%
Super Micro Computer	5.71%	27.83%	9.11%

Summary

Super Micro Computer beats Canon on 11 of the 14 factors compared between the two stocks.

About Canon

Canon Inc., together with its subsidiaries, manufactures and sells office multifunction devices (MFDs), plain paper copying machines, laser and inkjet printers, cameras, diagnostic equipment, and lithography equipment. The company operates through four segments: Printing Business Unit, Imaging Business Unit, Medical Business Unit, and Industrial and Others Business Unit. The Printing Business Unit segment offers office MFDs, document solutions, laser multifunction printers, laser printers, inkjet printers, image scanners, calculators, digital continuous feed presses, digital sheet-fed presses, and large format printers. The Imaging Business Unit segment provides interchangeable-lens digital cameras, digital compact cameras, interchangeable lenses, compact photo printers, network cameras, video management and video content analytics software, digital camcorders, digital cinema cameras, broadcast equipment, and multimedia projectors. The Medical System Business Unit segment offers computed tomography systems, diagnostic ultrasound systems, diagnostic X-ray systems, magnetic resonance imaging systems, clinical chemistry analyzers, digital radiography systems, and ophthalmic equipment. The Industry and Others Business Unit segment provides semiconductor lithography equipment, flat panel display lithography equipment, vacuum thin-film deposition equipment, organic light-emitting diode display manufacturing equipment, die bonders, handy terminals, and document scanners. The company also provides maintenance services; and supplies replacement drums, parts, toners, and papers. It sells its products under the Canon brand through subsidiaries or independent distributors to dealers and retail outlets, as well as directly to end-users globally. Canon Inc. was founded in 1933 and is headquartered in Tokyo, Japan.

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.