Contrasting Broadcom (NASDAQ:AVGO) and Sequans Communications (NASDAQ:SQNS)

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Broadcom (NASDAQ:AVGO) and Sequans Communications (NYSE:SQNS) are both computer and technology companies, but which is the better investment? We will compare the two companies based on the strength of their institutional ownership, valuation, dividends, analyst recommendations, risk, profitability and earnings.

Analyst Recommendations

This is a summary of recent ratings and target prices for Broadcom and Sequans Communications, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Broadcom 0 6 28 0 2.82
Sequans Communications 0 0 5 0 3.00

Broadcom presently has a consensus target price of $304.31, suggesting a potential upside of 13.69%. Sequans Communications has a consensus target price of $2.23, suggesting a potential upside of 171.34%. Given Sequans Communications’ stronger consensus rating and higher probable upside, analysts clearly believe Sequans Communications is more favorable than Broadcom.

Valuation & Earnings

This table compares Broadcom and Sequans Communications’ gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Broadcom $20.85 billion 5.11 $12.26 billion $18.83 14.21
Sequans Communications $40.25 million 1.63 -$36.22 million ($0.36) -2.28

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

Insider and Institutional Ownership

84.0% of Broadcom shares are held by institutional investors. Comparatively, 36.2% of Sequans Communications shares are held by institutional investors. 3.3% of Broadcom shares are held by insiders. Comparatively, 9.4% of Sequans Communications shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Risk & Volatility

Broadcom has a beta of 0.92, meaning that its share price is 8% less volatile than the S&P 500. Comparatively, Sequans Communications has a beta of 2.8, meaning that its share price is 180% more volatile than the S&P 500.

Profitability

This table compares Broadcom and Sequans Communications’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Broadcom 15.92% 32.81% 13.40%
Sequans Communications -120.67% -5,061.35% -55.96%

Dividends

Broadcom pays an annual dividend of $10.60 per share and has a dividend yield of 4.0%. Sequans Communications does not pay a dividend. Broadcom pays out 56.3% of its earnings in the form of a dividend. Broadcom has raised its dividend for 9 consecutive years.

Summary

Broadcom beats Sequans Communications on 12 of the 17 factors compared between the two stocks.

Broadcom Company Profile

Broadcom Inc. designs, develops, and supplies a range of 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 through four segments: Wired Infrastructure, Wireless Communications, Enterprise Storage, and Industrial & Other. The Wired Infrastructure segment provides set-top box system-on-chips (SoCs); cable, digital subscriber line, and passive optical networking central office/consumer premise equipment SoCs; Ethernet switching and routing application specific standard products; embedded processors and controllers; serializer/deserializer application specific integrated circuits; optical and copper, and physical layers; and fiber optic laser and receiver components. The Wireless Communications segment offers RF front end modules, filters, and power amplifiers; Wi-Fi, Bluetooth, and global positioning system/global navigation satellite system SoCs; and custom touch controllers. The Enterprise Storage segment provides serial attached small computer system interface, and redundant array of independent disks controllers and adapters; peripheral component interconnect express switches; fiber channel host bus adapters and switches; read channel based SoCs; custom flash controllers; and preamplifiers. The Industrial & Other segment offers optocouplers, industrial fiber optics, motion control encoders and subsystems, and light emitting diodes. The company's 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. is headquartered in San Jose, California.

Sequans Communications Company Profile

Sequans Communications S.A., together with its subsidiaries, engages in fabless designing, developing, and supplying 4G LTE semiconductor solutions for wireless broadband and Internet of Things applications. Its solutions incorporate baseband processor and radio frequency (RF) transceiver integrated circuits along with proprietary signal processing techniques, algorithms, and software stacks. The company offers baseband solutions used to encode and decode data based on 4G protocols that serve as the wireless processing platform for a 4G device; RF transceivers used to transmit and receive wireless transmissions; and system-on-chip solutions that integrate the baseband and RF transceiver functions. Its solutions serves as the wireless communications platform in various devices, including USB dongles; portable routers; embedded wireless modems for computing and multimedia devices; and customer-premises equipment, such as fixed wireless broadband access modems, routers, and residential gateways. The company's solutions also provide connectivity for industrial devices in transportation, security, asset tracking, retail, smart energy, smart city, agriculture, healthcare, and other applications. It serves OEMs, ODMs, contract manufacturers, or system integrators, as well as distributors who provide customer communications, logistics, and support functions. The company operates in the Asia-Pacific region, including Taiwan, China, South Korea, and Japan; Europe; the Middle East; and North and South America. Sequans Communications S.A. was founded in 2003 and is headquartered in Paris, France.

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