Critical Analysis: Semtech (NASDAQ:SMTC) and Skyworks Solutions (NASDAQ:SWKS)

Semtech (NASDAQ:SMTC) and Skyworks Solutions (NASDAQ:SWKS) are both large-cap technology companies, but which is the superior stock? We will compare the two companies based on the strength of their earnings, risk, institutional ownership, valuation, analyst recommendations, dividends and profitability.

Institutional & Insider Ownership

85.4% of Skyworks Solutions shares are owned by institutional investors. 0.4% of Semtech shares are owned by insiders. Comparatively, 0.2% of Skyworks Solutions shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Risk & Volatility

Semtech has a beta of 2.41, suggesting that its stock price is 141% more volatile than the S&P 500. Comparatively, Skyworks Solutions has a beta of 1.48, suggesting that its stock price is 48% more volatile than the S&P 500.

Profitability

This table compares Semtech and Skyworks Solutions’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Semtech	13.11%	21.74%	8.98%
Skyworks Solutions	7.23%	10.74%	7.95%

Earnings & Valuation

This table compares Semtech and Skyworks Solutions”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Semtech	$1.17 billion	14.89	-$40.38 million	$1.51	124.04
Skyworks Solutions	$4.09 billion	2.81	$477.10 million	$1.93	39.56

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

Analyst Recommendations

This is a summary of current ratings for Semtech and Skyworks Solutions, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Semtech	0	4	14	1	2.84
Skyworks Solutions	2	17	5	0	2.12

Semtech currently has a consensus target price of $208.06, suggesting a potential upside of 11.08%. Skyworks Solutions has a consensus target price of $79.21, suggesting a potential upside of 3.75%. Given Semtech’s stronger consensus rating and higher probable upside, research analysts clearly believe Semtech is more favorable than Skyworks Solutions.

Summary

Semtech beats Skyworks Solutions on 11 of the 15 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 Skyworks Solutions

Skyworks Solutions, Inc., together with its subsidiaries, designs, develops, manufactures, and markets proprietary semiconductor products in the United States, China, South Korea, Taiwan, Europe, the Middle East, Africa, and the rest of Asia-Pacific. Its product portfolio includes amplifiers, antenna tuners, attenuators, automotive tuners and digital radios, DC/DC converters, demodulators, detectors, diodes, wireless analog system on chip products, directional couplers, diversity receive modules, filters, front-end modules, hybrids, light emitting diode drivers, low noise amplifiers, mixers, modulators, optocouplers/optoisolators, phase locked loops, phase shifters, power dividers/combiners, power over ethernet, power isolators, receivers, switches, synthesizers, timing devices, voltage controlled oscillators/synthesizers, and voltage regulators. The company products are the used in aerospace, automotive, broadband, cellular infrastructure, connected home, defense, entertainment and gaming, industrial, medical, military, smartphone, tablet, and wearable markets. It sells its products through direct sales force, electronic component distributors, and independent sales representatives. Skyworks Solutions, Inc. was founded in 1962 and is based in Irvine, California.