Texas Instruments (TXN) vs. Applied Micro Circuits (AMCC) Critical Contrast

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

Insider and Institutional Ownership

83.8% of Texas Instruments shares are owned by institutional investors. Comparatively, 73.3% of Applied Micro Circuits shares are owned by institutional investors. 1.0% of Texas Instruments shares are owned by company insiders. Comparatively, 12.4% of Applied Micro Circuits shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Dividends

Texas Instruments pays an annual dividend of $2.00 per share and has a dividend yield of 2.1%. Applied Micro Circuits does not pay a dividend. Texas Instruments pays out 46.7% of its earnings in the form of a dividend.

Volatility and Risk

Texas Instruments has a beta of 1.24, suggesting that its share price is 24% more volatile than the S&P 500. Comparatively, Applied Micro Circuits has a beta of 1.81, suggesting that its share price is 81% more volatile than the S&P 500.

Valuation & Earnings

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

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Texas Instruments $14.18 billion 6.75 $6.28 billion $4.28 22.59
Applied Micro Circuits N/A N/A N/A ($0.38) -22.24

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.

Profitability

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

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

Analyst Ratings

This is a summary of current ratings for Texas Instruments and Applied Micro Circuits, as reported by MarketBeat.com.

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

Texas Instruments presently has a consensus price target of $93.58, indicating a potential downside of 3.22%. Applied Micro Circuits has a consensus price target of $8.00, indicating a potential downside of 5.33%. Given Texas Instruments’ stronger consensus rating and higher probable upside, equities analysts plainly believe Texas Instruments is more favorable than Applied Micro Circuits.

Summary

Texas Instruments beats Applied Micro Circuits on 10 of the 13 factors compared between the two stocks.

Texas Instruments Company Profile

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.

Applied Micro Circuits Company Profile

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.

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