Head to Head Review: Sigma Designs (SIGM) and Switch (SWCH)

Sigma Designs (NASDAQ: SIGM) and Switch (NYSE:SWCH) are both computer and technology companies, but which is the better business? We will compare the two companies based on the strength of their dividends, institutional ownership, profitability, analyst recommendations, earnings, valuation and risk.

Profitability

This table compares Sigma Designs and Switch’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Sigma Designs -35.55% -28.67% -20.04%
Switch 16.88% 42.87% 5.90%

Institutional & Insider Ownership

63.6% of Sigma Designs shares are held by institutional investors. 4.5% of Sigma Designs shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.

Analyst Ratings

This is a summary of recent ratings for Sigma Designs and Switch, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Sigma Designs 0 4 1 0 2.20
Switch 0 5 5 0 2.50

Sigma Designs currently has a consensus price target of $7.53, indicating a potential upside of 9.06%. Switch has a consensus price target of $22.20, indicating a potential upside of 27.22%. Given Switch’s stronger consensus rating and higher probable upside, analysts clearly believe Switch is more favorable than Sigma Designs.

Valuation and Earnings

This table compares Sigma Designs and Switch’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Sigma Designs $220.54 million 1.21 -$18.31 million ($0.94) -7.34
Switch $318.35 million 13.84 $31.36 million N/A N/A

Switch has higher revenue and earnings than Sigma Designs.

Summary

Switch beats Sigma Designs on 9 of the 11 factors compared between the two stocks.

About Sigma Designs

Sigma Designs, Inc. is a provider of global integrated semiconductor solutions. The Company offers media platforms for use in the home entertainment and home control markets. The Company sells its products into markets, including smart television, media connectivity, set-top box and Internet of Things (IoT) devices. The Company’s media processor product line consists of a range of functionally similar platforms that are based on integrated chips, embedded software and hardware reference designs. The Company’s media connectivity product line consists of wired home networking controller chipsets that are designed to provide connectivity solutions between various home entertainment products and incoming video streams. The Company’s IoT devices product line consists of its wireless Z-Wave chips and modules. The Company is engaged in the license of its internally developed intellectual property. It also offers legacy products that are sold into prosumer and other industrial applications.

About Switch

Switch, Inc. is a technology infrastructure company. The Company is developer and operator of the SUPERNAP, data center facilities, and provides colocation, telecommunications, cloud services, and content ecosystems. The Company designs, constructs and operates hyperscale data centers that address the growing challenges facing the data center industry. The Company’s patented technologies include 100% hot aisle containment rows, exterior wall penetrating multi-mode HVAC units, hot and cold containment segregation structure, redundant data center roofing system, multi-system power containers, data center infrastructure management system (DCIM).

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