Analyzing AXT (NASDAQ:AXTI) & Monolithic Power Systems (NASDAQ:MPWR)

Monolithic Power Systems (NASDAQ:MPWR) and AXT (NASDAQ:AXTI) are both technology companies, but which is the better stock? We will compare the two businesses based on the strength of their institutional ownership, risk, valuation, earnings, analyst recommendations, profitability and dividends.

Analyst Ratings

This is a summary of current ratings and target prices for Monolithic Power Systems and AXT, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Monolithic Power Systems	0	2	12	1	2.93
AXT	1	1	3	1	2.67

Monolithic Power Systems currently has a consensus price target of $1,731.42, indicating a potential upside of 27.74%. AXT has a consensus price target of $77.00, indicating a potential upside of 5.51%. Given Monolithic Power Systems’ stronger consensus rating and higher probable upside, equities analysts clearly believe Monolithic Power Systems is more favorable than AXT.

Risk and Volatility

Monolithic Power Systems has a beta of 1.66, suggesting that its share price is 66% more volatile than the S&P 500. Comparatively, AXT has a beta of 1.92, suggesting that its share price is 92% more volatile than the S&P 500.

Profitability

This table compares Monolithic Power Systems and AXT’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Monolithic Power Systems	24.41%	22.31%	18.67%
AXT	3.23%	0.96%	0.70%

Institutional & Insider Ownership

93.5% of Monolithic Power Systems shares are owned by institutional investors. Comparatively, 49.5% of AXT shares are owned by institutional investors. 3.6% of Monolithic Power Systems shares are owned by company insiders. Comparatively, 6.0% of AXT shares are owned by company 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.

Earnings and Valuation

This table compares Monolithic Power Systems and AXT”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Monolithic Power Systems	$2.79 billion	23.87	$621.48 million	$16.31	83.11
AXT	$88.33 million	54.18	-$21.26 million	$0.02	3,649.00

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

Summary

Monolithic Power Systems beats AXT on 10 of the 14 factors compared between the two stocks.

About Monolithic Power Systems

Monolithic Power Systems, Inc. engages in the design, development, marketing, and sale of semiconductor-based power electronics solutions for the storage and computing, automotive, enterprise data, consumer, communications, and industrial markets. The company provides direct current (DC) to DC integrated circuits (ICs) that are used to convert and control voltages of various electronic systems, such as cloud-based CPU servers, server artificial intelligence applications, storage applications, commercial notebooks, digital cockpit, power sources, home appliances, 4G and 5G infrastructure, and satellite communications applications. It offers lighting control ICs for backlighting that are used in systems, which provide the light source for LCD panels in computers and notebooks, monitors, car navigation systems, and televisions, as well as for general illumination products. The company sells its products through third-party distributors, value-added resellers, directly to original equipment manufacturers, original design manufacturers, electronic manufacturing service providers, and other end customers. It serves China, Taiwan, South Korea, Europe, Japan, Southeast Asia, the United States, and internationally. Monolithic Power Systems, Inc. was incorporated in 1997 and is headquartered in Kirkland, Washington.

About AXT

AXT, Inc. designs, develops, manufactures, and distributes compound and single element semiconductor substrates. The company offers indium phosphide for use in data center connectivity using light/lasers, high-speed data transfer in data centers, 5G communications, fiber optic lasers and detectors, consumer devices, passive optical networks, silicon photonics, photonic integrated circuits, thermo-photovoltaics, RF amplifier and switching, infrared light-emitting diode (LEDS) motion control, lidar for robotics and autonomous vehicles, and infrared thermal imaging. It also provides semi-insulating gallium arsenide (GaAs) substrates for use in Wi-Fi and IoT devices, transistors, direct broadcast television, power amplifiers, satellite communications, and solar cells; and semi-conducting GaAs substrates that are used in LEDs, screen displays using micro-LEDs, printer head lasers and LEDs, 3-D sensing using VCSELs, data center communication using VCSELs, sensors for industrial robotics/near-infrared sensors, optical couplers, solar cells, night vision goggles, lidar for robotics and autonomous vehicles, and other lasers, as well as laser machining, cutting, and drilling. In addition, the company offers germanium substrates for use in multi-junction solar cells for satellites, optical sensors and detectors, terrestrial concentrated photo voltaic cells, infrared detectors, and carrier wafer for LED. Further, it provides 6N+ and 7N+ purified gallium, boron trioxide, gallium-magnesium alloy, pyrolytic boron nitride (pBN) crucibles, and pBN insulating parts. It sells its products through direct salesforce in the United States, China, and Europe, as well as through independent sales representatives and distributors in Japan, Taiwan, Korea, and internationally. The company was formerly known as American Xtal Technology, Inc. and changed its name to AXT, Inc. in July 2000. AXT, Inc. was incorporated in 1986 and is headquartered in Fremont, California.