STMicroelectronics (STM) versus The Competition Critical Review

STMicroelectronics (NYSE: STM) is one of 104 publicly-traded companies in the “Semiconductors” industry, but how does it compare to its peers? We will compare STMicroelectronics to related businesses based on the strength of its earnings, analyst recommendations, dividends, valuation, profitability, risk and institutional ownership.

Volatility & Risk

STMicroelectronics has a beta of 0.78, meaning that its share price is 22% less volatile than the S&P 500. Comparatively, STMicroelectronics’ peers have a beta of 1.01, meaning that their average share price is 1% more volatile than the S&P 500.

Insider and Institutional Ownership

5.1% of STMicroelectronics shares are owned by institutional investors. Comparatively, 65.2% of shares of all “Semiconductors” companies are owned by institutional investors. 6.8% of shares of all “Semiconductors” companies are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Earnings and Valuation

This table compares STMicroelectronics and its peers top-line revenue, earnings per share and valuation.

Gross Revenue Net Income Price/Earnings Ratio
STMicroelectronics $6.97 billion $165.00 million 32.65
STMicroelectronics Competitors $4.31 billion $520.00 million 31.18

STMicroelectronics has higher revenue, but lower earnings than its peers. STMicroelectronics is trading at a higher price-to-earnings ratio than its peers, indicating that it is currently more expensive than other companies in its industry.

Profitability

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

Net Margins Return on Equity Return on Assets
STMicroelectronics 7.84% 13.47% 7.51%
STMicroelectronics Competitors -44.56% 1.34% 1.34%

Dividends

STMicroelectronics pays an annual dividend of $0.20 per share and has a dividend yield of 0.9%. STMicroelectronics pays out 29.4% of its earnings in the form of a dividend. As a group, “Semiconductors” companies pay a dividend yield of 1.5% and pay out 56.6% of their earnings in the form of a dividend.

Analyst Ratings

This is a breakdown of current recommendations and price targets for STMicroelectronics and its peers, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
STMicroelectronics 1 2 5 0 2.50
STMicroelectronics Competitors 936 4825 8836 368 2.58

STMicroelectronics currently has a consensus target price of $20.17, suggesting a potential downside of 9.16%. As a group, “Semiconductors” companies have a potential upside of 6.01%. Given STMicroelectronics’ peers stronger consensus rating and higher probable upside, analysts clearly believe STMicroelectronics has less favorable growth aspects than its peers.

Summary

STMicroelectronics peers beat STMicroelectronics on 9 of the 15 factors compared.

About STMicroelectronics

STMicroelectronics N.V. is a global semiconductor company that designs, develops, manufactures and markets a range of products, including discrete and standard commodity components, and application-specific integrated circuits (ASICs) for analog, digital and mixed-signal applications. The Company’s segments include Automotive and Discrete Group (ADG), Analog and MEMS Group (AMG), Microcontrollers and Digital ICs Group (MDG), and Others. ADG comprises all dedicated automotive Integrated Circuits (ICs), and discrete and power transistor products. AMG includes low-power analog ICs for all markets; smart power products; Touch Screen Controllers; Low Power Connectivity solutions for Internet of Things (IoT), and power conversion products. MDG comprises general purpose and secure microcontrollers, and Electrically Erasable Programmable Read-Only Memory memories. The Others segment includes all the financial values related to the Imaging Product Division, Subsystems and other products.

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