Reviewing Applied Materials (NASDAQ:AMAT) and Diodes (NASDAQ:DIOD)

Diodes (NASDAQ:DIOD) and Applied Materials (NASDAQ:AMAT) are both technology companies, but which is the superior investment? We will compare the two businesses based on the strength of their valuation, profitability, institutional ownership, earnings, risk, dividends and analyst recommendations.

Earnings and Valuation

This table compares Diodes and Applied Materials”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Diodes	$1.48 billion	2.80	$66.14 million	$2.49	36.50
Applied Materials	$28.37 billion	10.83	$7.00 billion	$11.60	33.39

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

Profitability

This table compares Diodes and Applied Materials’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Diodes	6.51%	6.17%	4.61%
Applied Materials	30.05%	38.02%	22.09%

Analyst Recommendations

This is a summary of current ratings and price targets for Diodes and Applied Materials, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Diodes	0	2	5	0	2.71
Applied Materials	0	9	30	0	2.77

Diodes presently has a consensus price target of $129.17, suggesting a potential upside of 42.10%. Applied Materials has a consensus price target of $625.76, suggesting a potential upside of 61.57%. Given Applied Materials’ stronger consensus rating and higher probable upside, analysts plainly believe Applied Materials is more favorable than Diodes.

Insider and Institutional Ownership

99.2% of Diodes shares are owned by institutional investors. Comparatively, 80.6% of Applied Materials shares are owned by institutional investors. 1.7% of Diodes shares are owned by company insiders. Comparatively, 0.3% of Applied Materials shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Risk and Volatility

Diodes has a beta of 1.96, suggesting that its share price is 96% more volatile than the S&P 500. Comparatively, Applied Materials has a beta of 1.67, suggesting that its share price is 67% more volatile than the S&P 500.

Summary

Applied Materials beats Diodes on 10 of the 14 factors compared between the two stocks.

About Diodes

Diodes Incorporated designs, manufactures and supplies semiconductor products used in electronic systems. Its portfolio includes discrete semiconductors, analog and mixed-signal devices, and power-management products, such as rectifiers, transistors, MOSFETs, protection devices, converters and LED drivers. The company’s products support applications in automotive, industrial, computing, consumer electronics and communications markets. Diodes serves customers globally through operations and sales across the Americas, Europe and Asia.

About Applied Materials

Applied Materials, Inc. develops and supplies equipment, software and services used to manufacture semiconductors and advanced displays. Its technologies help customers build and process materials at the microscopic scale required for chips and other electronic products. The company’s offerings include systems for depositing, removing and modifying materials, as well as inspection, measurement and process-control tools. It also provides equipment and services for advanced semiconductor packaging and supports customers with maintenance, upgrades and manufacturing software.