STMicroelectronics (NYSE: STM) and Texas Instruments (NASDAQ:TXN) are both large-cap technology companies, but which is the better stock? We will compare the two companies based on the strength of their valuation, dividends, analyst recommendations, institutional ownership, earnings, risk and profitability.
Volatility and Risk
STMicroelectronics has a beta of 0.71, suggesting that its stock price is 29% less volatile than the S&P 500. Comparatively, Texas Instruments has a beta of 1.24, suggesting that its stock price is 24% more volatile than the S&P 500.
This is a breakdown of current ratings and recommmendations for STMicroelectronics and Texas Instruments, as reported by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
STMicroelectronics currently has a consensus target price of $21.50, indicating a potential downside of 5.70%. Texas Instruments has a consensus target price of $110.54, indicating a potential upside of 2.02%. Given Texas Instruments’ higher probable upside, analysts clearly believe Texas Instruments is more favorable than STMicroelectronics.
STMicroelectronics pays an annual dividend of $0.20 per share and has a dividend yield of 0.9%. Texas Instruments pays an annual dividend of $2.48 per share and has a dividend yield of 2.3%. STMicroelectronics pays out 22.7% of its earnings in the form of a dividend. Texas Instruments pays out 68.7% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years.
This table compares STMicroelectronics and Texas Instruments’ net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
Valuation and Earnings
This table compares STMicroelectronics and Texas Instruments’ revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|STMicroelectronics||$8.35 billion||2.45||$802.00 million||$0.88||25.91|
|Texas Instruments||$14.96 billion||7.12||$3.68 billion||$3.61||30.01|
Texas Instruments has higher revenue and earnings than STMicroelectronics. STMicroelectronics is trading at a lower price-to-earnings ratio than Texas Instruments, indicating that it is currently the more affordable of the two stocks.
Insider & Institutional Ownership
5.0% of STMicroelectronics shares are held by institutional investors. Comparatively, 83.9% of Texas Instruments shares are held by institutional investors. 1.0% of Texas Instruments shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.
Texas Instruments beats STMicroelectronics on 14 of the 16 factors compared between the two stocks.
STMicroelectronics Company Profile
STMicroelectronics N.V. is a global semiconductor company that designs, develops, manufactures and markets a range of products, including discrete and standard commodity components, and application-specific integrated circuits (ASICs) for analog, digital and mixed-signal applications. The Company’s segments include Automotive and Discrete Group (ADG), Analog and MEMS Group (AMG), Microcontrollers and Digital ICs Group (MDG), and Others. ADG comprises all dedicated automotive Integrated Circuits (ICs), and discrete and power transistor products. AMG includes low-power analog ICs for all markets; smart power products; Touch Screen Controllers; Low Power Connectivity solutions for Internet of Things (IoT), and power conversion products. MDG comprises general purpose and secure microcontrollers, and Electrically Erasable Programmable Read-Only Memory memories. The Others segment includes all the financial values related to the Imaging Product Division, Subsystems and other products.
Texas Instruments Company Profile
Texas Instruments Incorporated designs, makes and sells semiconductors to electronics designers and manufacturers across the world. The Company operates through two segments: Analog and Embedded Processing. As of December 31, 2016, the Company had design, manufacturing or sales operations in more than 30 countries. The Company’s Analog segment’s product line includes High Volume Analog & Logic (HVAL), Power Management (Power), High Performance Analog (HPA) and Silicon Valley Analog (SVA). HVAL products support applications, such as automotive safety devices, touchscreen controllers, low-voltage motor drivers and integrated motor controllers. The Company’s Embedded Processing segment’s product line includes Processor, Microcontrollers and Connectivity. Processor products include digital signal processors (DSPs) and applications processors. DSPs perform mathematical computations to process digital data.
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