Applied Micro Circuits (NASDAQ:AMCC) versus Texas Instruments (TXN) Financial Survey

Applied Micro Circuits (NASDAQ: AMCC) and Texas Instruments (NASDAQ:TXN) are both semiconductors – nec companies, but which is the superior stock? We will contrast the two companies based on the strength of their valuation, dividends, earnings, analyst recommendations, profitability, institutional ownership and risk.

Profitability

This table compares Applied Micro Circuits and Texas Instruments’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Applied Micro Circuits -11.11% -16.63% -13.04%
Texas Instruments 29.98% 38.88% 25.30%

Analyst Ratings

This is a summary of recent ratings and price targets for Applied Micro Circuits and Texas Instruments, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Applied Micro Circuits 0 4 0 0 2.00
Texas Instruments 1 15 12 0 2.39

Applied Micro Circuits presently has a consensus target price of $8.00, suggesting a potential downside of 5.33%. Texas Instruments has a consensus target price of $93.58, suggesting a potential downside of 3.47%. Given Texas Instruments’ stronger consensus rating and higher probable upside, analysts clearly believe Texas Instruments is more favorable than Applied Micro Circuits.

Insider and Institutional Ownership

73.3% of Applied Micro Circuits shares are held by institutional investors. Comparatively, 83.9% of Texas Instruments shares are held by institutional investors. 12.4% of Applied Micro Circuits shares are held by insiders. Comparatively, 1.0% of Texas Instruments shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company will outperform the market over the long term.

Dividends

Texas Instruments pays an annual dividend of $2.48 per share and has a dividend yield of 2.6%. Applied Micro Circuits does not pay a dividend. Texas Instruments pays out 57.9% of its earnings in the form of a dividend.

Earnings and Valuation

This table compares Applied Micro Circuits and Texas Instruments’ gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio NetIncome Earnings Per Share Price/Earnings Ratio
Applied Micro Circuits N/A N/A N/A ($0.38) -22.24
Texas Instruments $13.37 billion 7.15 $3.60 billion $4.28 22.65

Texas Instruments has higher revenue and earnings than Applied Micro Circuits. Applied Micro Circuits is trading at a lower price-to-earnings ratio than Texas Instruments, indicating that it is currently the more affordable of the two stocks.

Summary

Texas Instruments beats Applied Micro Circuits on 10 of the 12 factors compared between the two stocks.

About Applied Micro Circuits

Applied Micro Circuits Corporation (AMCC) provides silicon solutions for cloud infrastructure and data centers, as well as connectivity products for edge, metro and long haul communications equipment. The Company’s products serve Computing and Connectivity markets. Its Computing products include the X-Gene family of server processors, based on the ARMv8 64-bit Instruction Set Architecture (ISA), which target mainstream cloud and data center infrastructure, including hyperscale, telco, enterprise and high performance computing. It also offers embedded computing products, which include HeliX family of processors, based on the ARM 64-bit ISA and its PowerPC products, based on Power Architecture. Its embedded Computing products are deployed in various applications, including networking and telecom, enterprise storage and industrial applications. The Connectivity business includes X-Weave family of products for service providers and public cloud, private cloud and enterprise data centers.

About Texas Instruments

Texas Instruments Incorporated designs, makes and sells semiconductors to electronics designers and manufacturers across the world. The Company operates through two segments: Analog and Embedded Processing. As of December 31, 2016, the Company had design, manufacturing or sales operations in more than 30 countries. The Company’s Analog segment’s product line includes High Volume Analog & Logic (HVAL), Power Management (Power), High Performance Analog (HPA) and Silicon Valley Analog (SVA). HVAL products support applications, such as automotive safety devices, touchscreen controllers, low-voltage motor drivers and integrated motor controllers. The Company’s Embedded Processing segment’s product line includes Processor, Microcontrollers and Connectivity. Processor products include digital signal processors (DSPs) and applications processors. DSPs perform mathematical computations to process digital data.

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