Spansion (NASDAQ: CODE) and Silicon Motion Technology Corporation (NASDAQ:SIMO) are both technology companies, but which is the better investment? We will compare the two businesses based on the strength of their earnings, risk, dividends, valuation, institutional ownership, profitability and analyst recommendations.

Insider and Institutional Ownership

81.2% of Silicon Motion Technology Corporation shares are held by institutional investors. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Analyst Ratings

This is a summary of current ratings and target prices for Spansion and Silicon Motion Technology Corporation, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Spansion 0 0 0 0 N/A
Silicon Motion Technology Corporation 0 3 11 0 2.79

Silicon Motion Technology Corporation has a consensus price target of $56.60, suggesting a potential upside of 17.84%. Given Silicon Motion Technology Corporation’s higher probable upside, analysts plainly believe Silicon Motion Technology Corporation is more favorable than Spansion.

Earnings and Valuation

This table compares Spansion and Silicon Motion Technology Corporation’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Spansion N/A N/A N/A N/A N/A
Silicon Motion Technology Corporation $562.80 million 3.05 $145.81 million $2.97 16.17

Silicon Motion Technology Corporation has higher revenue and earnings than Spansion.

Dividends

Silicon Motion Technology Corporation pays an annual dividend of $0.79 per share and has a dividend yield of 1.6%. Spansion does not pay a dividend. Silicon Motion Technology Corporation pays out 26.6% of its earnings in the form of a dividend.

Profitability

This table compares Spansion and Silicon Motion Technology Corporation’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Spansion -7.99% -18.66% -7.19%
Silicon Motion Technology Corporation 18.91% 24.24% 17.85%

Summary

Silicon Motion Technology Corporation beats Spansion on 8 of the 9 factors compared between the two stocks.

About Spansion

Spansion Inc. (Spansion) is a designer, manufacturer and developer of embedded systems solutions. The Company’s embedded systems solutions address a variety of applications, including automotive, consumer electronics, networking and telecommunications equipment, tablets, personal computers (PCs), gaming consoles and industrial equipment with a range of products. The Company has two product groups for embedded applications: flash memory and microcontrollers/analog products. Its flash memory market consists of two architectures: NOR and NAND flash memory. NOR flash memory is used for code execution and storage in consumer electronics, automobiles, communications, gaming and industrial applications. NAND flash memory is used for data storage in applications, such as solid-state drives, removable storage devices and embedded managed NAND devices. The Company focuses on embedded markets, such as transportation, industrial, consumer, communications and gaming markets.

About Silicon Motion Technology Corporation

Silicon Motion Technology Corporation is a fabless semiconductor company. The Company designs, develops and markets low-power semiconductor solutions to original equipment manufacturers (OEMs) and other customers in the mobile storage and mobile communications markets. It is engaged in developing negative-AND (NAND) flash controller integrated circuits (ICs) for solid-state storage devices and specialty radio frequency (RF) ICs for mobile devices. In the mobile storage market, the Company’s products are controllers used in embedded storage products, such as Solid State Drives (SSDs), and Embedded Multimedia Cards (eMMCs), as well as expandable storage products, such as flash memory cards and universal serial bus (USB) flash drives. For the mobile communications market, the Company’s products are handset transceivers and mobile television (TV) System on Chips (SoCs). The Company’s products are used in devices, such as smartphones, tablets and personal computers (PCs).

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