NeoMagic (OTCMKTS:NMGC) and Broadcom (NASDAQ:AVGO) Financial Analysis

Broadcom (NASDAQ:AVGO) and NeoMagic (OTCMKTS:NMGC) are both computer and technology companies, but which is the superior business? We will compare the two companies based on the strength of their earnings, analyst recommendations, institutional ownership, dividends, profitability, valuation and risk.

Insider and Institutional Ownership

76.4% of Broadcom shares are held by institutional investors. 1.9% of Broadcom shares are held by company insiders. Comparatively, 12.7% of NeoMagic shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock will outperform the market over the long term.

Analyst Recommendations

This is a breakdown of recent recommendations and price targets for Broadcom and NeoMagic, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Broadcom	0	3	29	1	2.94
NeoMagic	0	0	0	0	0.00

Broadcom currently has a consensus price target of $435.30, suggesting a potential upside of 35.12%. Given Broadcom’s stronger consensus rating and higher possible upside, equities research analysts clearly believe Broadcom is more favorable than NeoMagic.

Profitability

This table compares Broadcom and NeoMagic’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Broadcom	36.57%	38.61%	17.49%
NeoMagic	N/A	N/A	N/A

Earnings & Valuation

This table compares Broadcom and NeoMagic”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Broadcom	$68.28 billion	22.37	$23.13 billion	$5.12	62.92
NeoMagic	N/A	N/A	N/A	N/A	N/A

Broadcom has higher revenue and earnings than NeoMagic.

Summary

Broadcom beats NeoMagic on 9 of the 10 factors compared between the two stocks.

About Broadcom

Broadcom Inc. designs, develops, and supplies various semiconductor devices with a focus on complex digital and mixed signal complementary metal oxide semiconductor based devices and analog III-V based products worldwide. The company operates in two segments, Semiconductor Solutions and Infrastructure Software. It provides set-top box system-on-chips (SoCs); cable, digital subscriber line, and passive optical networking central office/consumer premise equipment SoCs; wireless local area network access point SoCs; Ethernet switching and routing custom silicon solutions; serializer/deserializer application specific integrated circuits; optical and copper, and physical layer devices; and fiber optic components and RF semiconductor devices. The company also offers RF front end modules and filter; Wi-Fi, Bluetooth, and global positioning system/global navigation satellite system SoCs; custom touch controllers; inductive charging; attached small computer system interface, and redundant array of independent disks controllers and adapters; peripheral component interconnect express; fiber channel host bus adapters; read channel based SoCs; custom flash controllers; preamplifiers; optocouplers, industrial fiber optics, and motion control encoders and subsystems; light emitting diode, ethernet PHYs, switch ICs, and camera microcontrollers. Its products are used in various applications, including enterprise and data center networking, home connectivity, set-top boxes, broadband access, telecommunication equipment, smartphones and base stations, data center servers and storage systems, factory automation, power generation and alternative energy systems, and electronic displays. Broadcom Inc. was founded in 1961 and is headquartered in Palo Alto, California.

About NeoMagic

NeoMagic Corporation designs and delivers semiconductors and software solutions for video, television, imaging, graphic, and audio devices. It offers microcontrollers; horizon digital picture frame and digital mobile TV solutions; and SOC processors, such as application processors and Neomobile TV solutions. The company, through its MercadoMagico.com division, operates an e-Commerce platform that allows user to buy and sell products from one another or buy premium electronic products. It sells its applications processors under the MiMagic brand name. The company was founded in 1993 and is based in Milpitas, California.