Intersil (NASDAQ: ISIL) and Semtech (NASDAQ:SMTC) are both technology companies, but which is the better business? We will contrast the two businesses based on the strength of their institutional ownership, analyst recommendations, dividends, earnings, profitability, risk and valuation.

Profitability

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

Net Margins Return on Equity Return on Assets
Intersil 13.67% 7.83% 6.57%
Semtech 7.79% 12.13% 7.38%

Dividends

Intersil pays an annual dividend of $0.48 per share. Semtech does not pay a dividend. Intersil pays out 137.1% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Analyst Recommendations

This is a summary of recent ratings for Intersil and Semtech, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Intersil 0 1 0 0 2.00
Semtech 0 2 9 0 2.82

Intersil currently has a consensus price target of $22.50, indicating a potential upside of Infinity. Semtech has a consensus price target of $41.90, indicating a potential upside of 7.99%. Given Intersil’s higher probable upside, equities research analysts plainly believe Intersil is more favorable than Semtech.

Insider & Institutional Ownership

93.4% of Intersil shares are owned by institutional investors. Comparatively, 94.0% of Semtech shares are owned by institutional investors. 1.6% of Intersil shares are owned by insiders. Comparatively, 2.1% of Semtech shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.

Valuation & Earnings

This table compares Intersil and Semtech’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Intersil N/A N/A N/A $0.35 N/A
Semtech $544.27 million 4.73 $54.66 million $0.69 56.23

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

Summary

Semtech beats Intersil on 9 of the 12 factors compared between the two stocks.

Intersil Company Profile

Intersil Corporation is engaged in designing and developing power management and precision analog integrated circuits (IC). The Company provides power management and precision analog technology for applications in the infrastructure, industrial, automotive, military, aerospace, computing, and consumer markets. It supplies a range of power IC solutions for battery management, processor power management and display power management, including power regulators, converters and controllers, as well as integrated power modules. It also provides precision analog components, such as amplifiers and buffers, proximity and light sensors, data converters, optoelectronics, video decoders and interface products. It is also a supplier of radiation-hardened devices to the military and aerospace industries. It operates in approximately two market categories, including industrial and infrastructure, and computing and consumer.

Semtech Company Profile

Semtech Corporation is a supplier of analog and mixed-signal semiconductor products. The Company designs, develops and markets a range of products for commercial applications, which are sold into the enterprise computing, communications, consumer and industrial end-markets. Its product lines include Signal Integrity, Protection, Wireless and Sensing, and Power and High-Reliability. Applications for the industrial market include video broadcast studio equipment, automated meter reading, wireless charging, military and aerospace, medical, security systems, automotive, Internet of Things, industrial and home automation, and video security and surveillance. Enterprise computing end-markets include desktops, notebooks, servers, graphic boards, printers, datacenter related equipment and passive optical networks. Communications end-market applications include wireless base stations, carrier networks, switches and routers, cable modems, signal conditioners and wireless local area network.

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