AXT (NASDAQ:AXTI) versus STMicroelectronics (NASDAQ:STM) Critical Contrast

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AXT (NASDAQ:AXTI) and STMicroelectronics (NYSE:STM) are both computer and technology companies, but which is the better stock? We will contrast the two businesses based on the strength of their profitability, earnings, analyst recommendations, dividends, institutional ownership, valuation and risk.

Dividends

STMicroelectronics pays an annual dividend of $0.20 per share and has a dividend yield of 1.1%. AXT does not pay a dividend. STMicroelectronics pays out 14.0% of its earnings in the form of a dividend.

Profitability

This table compares AXT and STMicroelectronics’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
AXT 5.78% 2.97% 2.58%
STMicroelectronics 12.89% 19.85% 11.50%

Earnings & Valuation

This table compares AXT and STMicroelectronics’ gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
AXT $102.40 million 1.57 $9.65 million $0.24 16.67
STMicroelectronics $9.66 billion 1.66 $1.29 billion $1.43 12.49

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

Institutional and Insider Ownership

57.7% of AXT shares are owned by institutional investors. Comparatively, 3.4% of STMicroelectronics shares are owned by institutional investors. 7.4% of AXT shares are owned 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.

Volatility & Risk

AXT has a beta of 1.45, meaning that its stock price is 45% more volatile than the S&P 500. Comparatively, STMicroelectronics has a beta of 1.37, meaning that its stock price is 37% more volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of current ratings for AXT and STMicroelectronics, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
AXT 0 0 2 0 3.00
STMicroelectronics 1 3 8 0 2.58

AXT presently has a consensus target price of $6.25, indicating a potential upside of 56.25%. STMicroelectronics has a consensus target price of $17.35, indicating a potential downside of 2.84%. Given AXT’s stronger consensus rating and higher probable upside, equities research analysts plainly believe AXT is more favorable than STMicroelectronics.

Summary

STMicroelectronics beats AXT on 9 of the 16 factors compared between the two stocks.

About AXT

AXT, Inc. researches, develops, and produces compound and single element semiconductor substrates. It produces semiconductor substrates using its proprietary vertical gradient freeze technology. The company offers indium phosphide (InP) for use in fiber optic lasers and detectors, passive optical networks, data center connectivity, silicon photonics, photonic integrated circuits, terrestrial solar cells, radio frequency amplifier and switching, infrared light-emitting diode (LEDs) motion control, and infrared thermal imaging. It also provides semi-insulating gallium arsenide (GaAs) substrates for applications in power amplifiers, direct broadcast television, transistors, satellite communications, and solar cells; and semi-conducting GaAs substrates that are used in 3-D sensing, data center communication, high brightness LEDs, lasers, near-infrared sensors, printer head lasers and LEDs, optical couplers, solar cells, and night vision goggles, as well as laser machining, cutting, and drilling. In addition, the company offers germanium (Ge) substrates for use in satellite solar cells, optical sensors and detectors, terrestrial concentrated photo voltaic cells, multi-junction solar cells for satellites, and infrared detectors. Further, it provides materials, including raw gallium, gallium alloys, InP poly-crystal, high purity gallium, arsenic, Ge, Ge dioxide, pyrolytic boron nitride crucibles, and boron oxide. AXT, Inc. sells its products through direct salesforce in the United States, China, and Europe, as well as through independent sales representatives and distributors in Japan, Taiwan, Korea, and internationally. The company was formerly known as American Xtal Technology, Inc. and changed its name to AXT, Inc. in July 2000. AXT, Inc. was founded in 1986 and is headquartered in Fremont, California.

About STMicroelectronics

STMicroelectronics N.V., together with its subsidiaries, develops, manufactures, and markets semiconductor products worldwide. It operates through Automotive and Discrete Group; Analog, MEMS and Sensors Group; and Microcontrollers and Digital ICs Group segments. The company offers a range of products, including discrete and standard commodity components, application-specific integrated circuits, full-custom and semi-custom devices, and application-specific standard products for analog, digital, and mixed-signal applications, as well as silicon chips and smartcards. It also provides subsystems, and assembly and other services. The company sells its products through its distributors and retailers, as well as through sales representatives. STMicroelectronics N.V. was founded in 1987 and is headquartered in Geneva, Switzerland.

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