Critical Review: CEVA (CEVA) versus Rambus (RMBS)

CEVA (NASDAQ: CEVA) and Rambus (NASDAQ:RMBS) are both small-cap computer and technology companies, but which is the superior business? We will contrast the two businesses based on the strength of their risk, dividends, profitability, earnings, analyst recommendations, valuation and institutional ownership.

Insider & Institutional Ownership

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90.3% of CEVA shares are held by institutional investors. Comparatively, 81.2% of Rambus shares are held by institutional investors. 3.9% of CEVA shares are held by insiders. Comparatively, 3.2% of Rambus shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company is poised for long-term growth.

Profitability

This table compares CEVA and Rambus’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
CEVA 19.46% 7.82% 6.94%
Rambus -4.70% 9.54% 6.65%

Analyst Ratings

This is a breakdown of current ratings and recommmendations for CEVA and Rambus, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
CEVA 0 1 5 0 2.83
Rambus 0 2 3 0 2.60

CEVA presently has a consensus price target of $47.50, suggesting a potential upside of 31.76%. Rambus has a consensus price target of $16.38, suggesting a potential upside of 24.09%. Given CEVA’s stronger consensus rating and higher possible upside, equities analysts plainly believe CEVA is more favorable than Rambus.

Valuation & Earnings

This table compares CEVA and Rambus’ revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
CEVA $87.51 million 9.15 $17.02 million $0.76 47.43
Rambus $393.10 million 3.71 -$22.86 million ($0.17) -77.64

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

Volatility and Risk

CEVA has a beta of 0.88, indicating that its share price is 12% less volatile than the S&P 500. Comparatively, Rambus has a beta of 0.5, indicating that its share price is 50% less volatile than the S&P 500.

Summary

CEVA beats Rambus on 12 of the 14 factors compared between the two stocks.

CEVA Company Profile

CEVA, Inc. (CEVA) is a licensor of signal processing intellectual property (IP). The Company partners with semiconductor companies and original equipment manufacturers (OEMs) to create connected devices for a range of end markets, including mobile, consumer, automotive, industrial and Internet of things (IoT). The Company operates in the segment of licensing of intellectual property to semiconductor companies and electronic equipment manufacturers. CEVA addresses the requirements of the mobile, consumer, automotive, industrial and IoT markets by designing and licensing a range of application-specific signal processing platforms, which enable the design of solutions for developing a range of applications, including communications and connectivity, audio and voice, imaging and vision, and storage.

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.

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