Financial Contrast: Rambus (RMBS) vs. Alpha & Omega Semiconductor (AOSL)

Rambus (NASDAQ: RMBS) and Alpha & Omega Semiconductor (NASDAQ:AOSL) are both small-cap computer and 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.

Risk & Volatility

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Rambus has a beta of 0.5, meaning that its share price is 50% less volatile than the S&P 500. Comparatively, Alpha & Omega Semiconductor has a beta of 0.4, meaning that its share price is 60% less volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of current ratings and recommmendations for Rambus and Alpha & Omega Semiconductor, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Rambus 0 2 3 0 2.60
Alpha & Omega Semiconductor 0 1 3 0 2.75

Rambus currently has a consensus target price of $16.38, indicating a potential upside of 24.09%. Alpha & Omega Semiconductor has a consensus target price of $24.00, indicating a potential upside of 50.00%. Given Alpha & Omega Semiconductor’s stronger consensus rating and higher probable upside, analysts clearly believe Alpha & Omega Semiconductor is more favorable than Rambus.

Profitability

This table compares Rambus and Alpha & Omega Semiconductor’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Rambus -4.70% 9.54% 6.65%
Alpha & Omega Semiconductor 4.82% 4.84% 3.72%

Valuation and Earnings

This table compares Rambus and Alpha & Omega Semiconductor’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Rambus $393.10 million 3.71 -$22.86 million ($0.17) -77.64
Alpha & Omega Semiconductor $383.34 million 1.00 $13.82 million $0.77 20.78

Alpha & Omega Semiconductor has lower revenue, but higher earnings than Rambus. Rambus is trading at a lower price-to-earnings ratio than Alpha & Omega Semiconductor, indicating that it is currently the more affordable of the two stocks.

Institutional and Insider Ownership

81.2% of Rambus shares are held by institutional investors. Comparatively, 70.3% of Alpha & Omega Semiconductor shares are held by institutional investors. 3.2% of Rambus shares are held by company insiders. Comparatively, 21.7% of Alpha & Omega Semiconductor shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Summary

Alpha & Omega Semiconductor beats Rambus on 7 of the 13 factors compared between the two stocks.

Rambus Company Profile

Rambus Inc. (Rambus) produces hardware and software technologies. The Company’s segments include Memory and Interface Division (MID), which focuses the design, development, manufacturing through partnerships and licensing of technology and solutions that is related to memory and interfaces; Rambus Security Division (RSD), which focuses on the design, development and licensing of technologies for chip and system security, anti-counterfeiting, smart ticketing and mobile payments; Emerging Solutions Division (ESD), which encompasses its long-term research and development efforts in the area of emerging technologies, and Rambus Lighting Division (RLD), which focuses on the design, development and licensing of technologies for lighting. The Company collaborates with application-specific integrated circuit (ASIC) and System-on-Chip (SoC) designers, foundries, Internet protocol (IP) developers, processor companies, electronic design automation (EDA) companies and validation laboratories.

Alpha & Omega Semiconductor Company Profile

Alpha and Omega Semiconductor Limited and its subsidiaries design, develop, and supply various power semiconductors. It offers various power discrete products, including low, medium, and high voltage power metal-oxide-semiconductor field-effect transistors (MOSFETs); and SRFETs, XSFET, electrostatic discharges, protected MOSFETs, and insulated gate bipolar transistors, which are used for routing current and switching voltages in power control circuits. The company also provides power IC products comprising devices that are used for power management and power delivery; and analog power devices that are used for circuit protection and signal switching. Its power discrete products are used in applications, such as smart phone charges, battery packs, notebooks, desktop and servers, data centers, basic stations, graphics card, game boxes, TVs, AC adapters, power supplies, e-bikes, motor control, power tools, e-vehicles, white goods and industrial motor drives, UPS systems, wind turbines, solar inverters, and industrial welding; and power ICs have applications in flat panel displays, TVs, notebooks, ultrabooks, servers, DVD/Blu-Ray players, set-top boxes, and networking equipment, as well as desktop PCs, tablets, smartphones, and portable electronic devices. The company markets its products directly, as well as through distributors and original design manufacturers to original equipment manufacturers. It serves customers in the consumer, computing, communications, and industrial markets primarily in the United States, Hong Kong, China, Taiwan, Korea, Germany, and Japan. Alpha and Omega Semiconductor Limited was incorporated in 2000 and is headquartered in Sunnyvale, California.

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