Analog Devices (NASDAQ: ADI) and Tower Semiconductor (NASDAQ:TSEM) are both mid-cap technology companies, but which is the superior investment? We will compare the two companies based on the strength of their profitability, analyst recommendations, risk, institutional ownership, dividends, valuation and earnings.

Analyst Recommendations

This is a breakdown of current ratings and price targets for Analog Devices and Tower Semiconductor, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Analog Devices 0 9 16 0 2.64
Tower Semiconductor 0 0 3 1 3.25

Analog Devices presently has a consensus price target of $97.09, indicating a potential upside of 10.39%. Tower Semiconductor has a consensus price target of $43.75, indicating a potential upside of 29.40%. Given Tower Semiconductor’s stronger consensus rating and higher possible upside, analysts plainly believe Tower Semiconductor is more favorable than Analog Devices.

Volatility & Risk

Analog Devices has a beta of 1.29, suggesting that its share price is 29% more volatile than the S&P 500. Comparatively, Tower Semiconductor has a beta of 0.97, suggesting that its share price is 3% less volatile than the S&P 500.

Insider and Institutional Ownership

87.0% of Analog Devices shares are held by institutional investors. Comparatively, 44.0% of Tower Semiconductor shares are held by institutional investors. 1.1% of Analog Devices shares are held by company insiders. Comparatively, 1.0% of Tower Semiconductor shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Dividends

Analog Devices pays an annual dividend of $1.80 per share and has a dividend yield of 2.0%. Tower Semiconductor does not pay a dividend. Analog Devices pays out 90.9% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Valuation & Earnings

This table compares Analog Devices and Tower Semiconductor’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Analog Devices $5.11 billion 6.35 $727.25 million $1.98 44.42
Tower Semiconductor $1.25 billion 2.66 $203.92 million $1.97 17.16

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

Profitability

This table compares Analog Devices and Tower Semiconductor’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Analog Devices 14.22% 18.78% 8.40%
Tower Semiconductor 14.53% 27.82% 14.80%

Summary

Analog Devices beats Tower Semiconductor on 10 of the 17 factors compared between the two stocks.

Analog Devices Company Profile

Analog Devices, Inc. (Analog Devices) designs, manufactures and markets a portfolio of solutions that leverage high-performance analog, mixed-signal and digital signal processing technology, including integrated circuits (ICs), algorithms, software and subsystems. Its products include Analog Products, Converters, Amplifiers/Radio Frequency, Other Analog, Power Management and Reference, and Digital Signal Processing Products. The Company is a supplier of data converter products. The Company is a supplier of high-performance amplifiers. Its analog product line also includes products of high performance radio frequency (RF) ICs. The Company’s DSPs are used for high-speed numeric calculations. The Company offers its products for applications in various end markets, such as industrial, automotive, consumer and communications. The Company operates in the United States, Rest of North/South America, Europe, Japan and China.

Tower Semiconductor Company Profile

Tower Semiconductor Ltd. operates as an independent semiconductor foundry focused primarily on specialty process technologies. The Company focuses on producing integrated circuits (ICs) based on the design specifications of its customers. The Company manufactures semiconductors for its customers primarily based on third-party designs. It offers process manufacture geometries of 0.35, 0.50, 0.55, 0.60, 0.80-micron and above on 150 millimeter wafers, 0.35, 0.18. 0.16, 0.13 and 0.11-micron on 200 millimeter wafers, and 65 nanometer and 45 nanometer on 300 millimeter wafers. It also provides design support and technical services. The Company’s ICs are incorporated into a range of products in markets, including consumer electronics, personal computers, communications, automotive, industrial and medical device products. The Company has manufacturing facilities in the United States, Israel and Japan.

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