Analyzing Inphi (IPHI) and United Microelectronics (UMC)

Inphi (NYSE: IPHI) and United Microelectronics (NYSE:UMC) are both computer and technology companies, but which is the better business? We will compare the two companies based on the strength of their risk, valuation, institutional ownership, earnings, analyst recommendations, dividends and profitability.

Profitability

This table compares Inphi and United Microelectronics’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Inphi -21.51% 5.39% 2.43%
United Microelectronics 6.43% 4.48% 2.51%

Earnings and Valuation

This table compares Inphi and United Microelectronics’ gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Inphi $348.20 million 3.74 -$74.90 million ($1.78) -16.96
United Microelectronics $5.01 billion 1.26 $323.00 million $0.13 19.85

United Microelectronics has higher revenue and earnings than Inphi. Inphi is trading at a lower price-to-earnings ratio than United Microelectronics, indicating that it is currently the more affordable of the two stocks.

Institutional & Insider Ownership

5.8% of United Microelectronics shares are held by institutional investors. 3.6% of Inphi shares are held by company insiders. Comparatively, 8.0% of United Microelectronics shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Volatility and Risk

Inphi has a beta of 1.02, suggesting that its share price is 2% more volatile than the S&P 500. Comparatively, United Microelectronics has a beta of 0.59, suggesting that its share price is 41% less volatile than the S&P 500.

Analyst Recommendations

This is a summary of current ratings and target prices for Inphi and United Microelectronics, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Inphi 2 3 8 1 2.57
United Microelectronics 7 1 1 0 1.33

Inphi currently has a consensus price target of $39.93, suggesting a potential upside of 32.30%. United Microelectronics has a consensus price target of $2.10, suggesting a potential downside of 18.60%. Given Inphi’s stronger consensus rating and higher possible upside, analysts plainly believe Inphi is more favorable than United Microelectronics.

Dividends

United Microelectronics pays an annual dividend of $0.06 per share and has a dividend yield of 2.3%. Inphi does not pay a dividend. United Microelectronics pays out 46.2% of its earnings in the form of a dividend.

Summary

United Microelectronics beats Inphi on 9 of the 17 factors compared between the two stocks.

About Inphi

Inphi Corporation is a provider of analog and mixed signal semiconductor solutions for the communications and datacenter markets. The Company’s solutions provide an interface between analog signals and digital information in systems, such as telecommunications transport systems, enterprise networking equipment and datacenters. It is engaged in the design, development and sale of analog connectivity components that operate to maintain, amplify and manage signal integrity at high speeds in a range of applications. Its semiconductor solutions are designed to address bandwidth bottlenecks in networks and enable the rollout of communications and datacenter infrastructures. The Company provides 25 gigabit (G) to 600G high-speed analog semiconductor solutions for the communications market. As of December 31, 2016, the Company’s product portfolio included products that had commercially shipped, products for which the Company had shipped engineering samples and products under development.

About United Microelectronics

United Microelectronics Corporation is a global semiconductor foundry. The Company provides integrated circuit (IC) production for applications spanning every sector of the electronics industry. The Company operates through two segments: wafer fabrication and new business. The primary operating activity of the Company’s wafer fabrication segment is the manufacture of chips to the design specifications of its customers by using its own processes and techniques. The new business segment primarily includes researching, developing, manufacturing, and providing solar energy and new generation light-emitting diode (LED). The Company maintains a customer base across various industries, including communication, consumer electronics, computer, memory and others, while focusing on manufacturing for applications, including networking, telecommunications, Internet, multimedia, personal computers (PCs) and graphics.

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