Reviewing IPG Photonics (IPGP) and STMicroelectronics (STM)

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

Analyst Recommendations

This is a summary of recent recommendations and price targets for IPG Photonics and STMicroelectronics, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
IPG Photonics 0 2 7 0 2.78
STMicroelectronics 0 2 4 0 2.67

IPG Photonics currently has a consensus target price of $234.44, suggesting a potential downside of 4.98%. STMicroelectronics has a consensus target price of $22.25, suggesting a potential downside of 6.98%. Given IPG Photonics’ stronger consensus rating and higher possible upside, equities analysts clearly believe IPG Photonics is more favorable than STMicroelectronics.

Valuation & Earnings

This table compares IPG Photonics and STMicroelectronics’ revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
IPG Photonics $1.41 billion 9.40 $347.61 million $7.26 33.99
STMicroelectronics $8.35 billion 2.57 $802.00 million $0.98 24.41

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

Institutional & Insider Ownership

56.1% of IPG Photonics shares are held by institutional investors. Comparatively, 4.5% of STMicroelectronics shares are held by institutional investors. 33.8% of IPG Photonics shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock is poised for long-term growth.

Profitability

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

Net Margins Return on Equity Return on Assets
IPG Photonics 25.56% 21.59% 18.73%
STMicroelectronics 10.67% 19.45% 10.82%

Risk and Volatility

IPG Photonics has a beta of 1.85, meaning that its stock price is 85% more volatile than the S&P 500. Comparatively, STMicroelectronics has a beta of 0.79, meaning that its stock price is 21% less volatile than the S&P 500.

Dividends

STMicroelectronics pays an annual dividend of $0.20 per share and has a dividend yield of 0.8%. IPG Photonics does not pay a dividend. STMicroelectronics pays out 20.4% of its earnings in the form of a dividend.

Summary

IPG Photonics beats STMicroelectronics on 13 of the 16 factors compared between the two stocks.

IPG Photonics Company Profile

IPG Photonics Corporation develops and manufactures a range of high-performance fiber lasers, fiber amplifiers, and diode lasers used in various applications primarily in materials processing worldwide. The company's laser products include low, medium, and high power lasers; fiber pigtailed packaged diodes and fiber coupled direct diode laser systems; high-energy pulsed lasers, multi-wavelength and tunable lasers, and single-polarization and single-frequency lasers; laser diode chips and packaged laser diodes; and high power optical fiber delivery cables, fiber couplers, beam switches, chillers, scanners, and other accessories. It also provides erbium-doped fiber and Raman amplifiers, and integrated communications systems, which are deployed in broadband networks, such as fiber to the home, fiber to the curb, passive optical networks, and dense wavelength division multiplexing (DWDM) networks; ytterbium and thulium specialty fiber amplifiers and broadband light sources; and single-frequency, linearly polarized, and polarization-maintaining versions of its amplifier products. In addition, the company offers interconnect, coarse wavelength division multiplexing, DWDM, and tunable-based pluggable interfaces to serve optical transmission needs; integrated laser systems; 2D flat sheet cutter systems and multi-axis systems; welding seam stepper and picker, a fiber laser welding tool; and specialized fiber laser systems for material processing applications. Its lasers and amplifiers are also used in materials processing, advanced communications, and medical applications. The company markets its products to original equipment manufacturers, system integrators, and end users through direct sales force, as well as through agreements with independent sales representatives and distributors. IPG Photonics Corporation was founded in 1990 and is headquartered in Oxford, Massachusetts.

STMicroelectronics Company Profile

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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