Reviewing Silicon Motion Technology (SIMO) and Diodes (DIOD)

Silicon Motion Technology (NASDAQ:SIMO) and Diodes (NASDAQ:DIOD) are both small-cap computer and technology companies, but which is the superior investment? We will contrast the two companies based on the strength of their valuation, earnings, profitability, risk, institutional ownership, analyst recommendations and dividends.

Analyst Ratings

This is a summary of current ratings for Silicon Motion Technology and Diodes, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Silicon Motion Technology 1 3 10 0 2.64
Diodes 0 0 4 0 3.00

Silicon Motion Technology currently has a consensus price target of $56.08, indicating a potential upside of 56.35%. Diodes has a consensus price target of $38.00, indicating a potential upside of 9.10%. Given Silicon Motion Technology’s higher probable upside, research analysts plainly believe Silicon Motion Technology is more favorable than Diodes.

Earnings and Valuation

This table compares Silicon Motion Technology and Diodes’ revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Silicon Motion Technology $523.40 million 2.47 $74.95 million $2.09 17.16
Diodes $1.05 billion 1.65 -$1.80 million $1.37 25.42

Silicon Motion Technology has higher earnings, but lower revenue than Diodes. Silicon Motion Technology is trading at a lower price-to-earnings ratio than Diodes, indicating that it is currently the more affordable of the two stocks.

Institutional & Insider Ownership

74.0% of Silicon Motion Technology shares are held by institutional investors. Comparatively, 78.4% of Diodes shares are held by institutional investors. 6.7% of Diodes shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company is poised for long-term growth.

Dividends

Silicon Motion Technology pays an annual dividend of $1.19 per share and has a dividend yield of 3.3%. Diodes does not pay a dividend. Silicon Motion Technology pays out 56.9% of its earnings in the form of a dividend. Silicon Motion Technology has increased its dividend for 2 consecutive years.

Profitability

This table compares Silicon Motion Technology and Diodes’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Silicon Motion Technology 17.10% 17.92% 13.97%
Diodes 3.75% 11.99% 7.48%

Risk & Volatility

Silicon Motion Technology has a beta of 0.95, indicating that its share price is 5% less volatile than the S&P 500. Comparatively, Diodes has a beta of 1.06, indicating that its share price is 6% more volatile than the S&P 500.

Summary

Silicon Motion Technology beats Diodes on 10 of the 17 factors compared between the two stocks.

About Silicon Motion Technology

Silicon Motion Technology Corporation, together with its subsidiaries, designs, develops, and markets semiconductor solutions for the mobile and enterprise storage, and mobile communications markets worldwide. It offers embedded storage and expandable storage products, including NAND flash controllers, such as embedded multimediacard (eMMC), universal flash storage, client solid-state drive (SSD), secure digital card, flash memory card controller, and universal serial bus flash drive controller products. The company also provides specialty storage solutions, such as customized enterprise-grade peripheral component interconnect express SSDs; and industrial-grade and commercial-grade single-chip SSDs. In addition, it offers specialty radio frequency integrated circuits (RF ICs), such as mobile TV system-on-chips (SoCs) and low power WiFi SoCs. The company's products are used in smartphones, tablets, digital cameras, camcorders, and desktop and notebook PCs, as well as in industrial, enterprise, commercial, and other applications. It offers its controllers under the SMI brand; enterprise-grade SSDs under the Shannon brand; single-chip industrial-grade SSDs under the Ferri SSD and Ferri-eMMC brands; RF ICs under the FCI brand; and software-defined storage products under the Bigtera brand. The company markets and sells its products through direct sales personnel and independent electronics distributors to flash manufacturers, original equipment manufacturers, and module makers. Silicon Motion Technology Corporation was founded in 1995 and is based in Kowloon, Hong Kong.

About Diodes

Diodes Incorporated, together with its subsidiaries, designs, manufactures, and supplies application-specific standard products in the discrete, logic, and analog and mixed semiconductor markets in Asia, North America, Europe, and internationally. It primarily focuses on low pin count semiconductor devices with one or more active or passive components. The company offers discrete semiconductor products, such as performance Schottky rectifiers and diodes; Zener diodes, including tight tolerance and low operating current type performance Zener diodes; standard, fast, super-fast, and ultra-fast recovery rectifiers; bridge rectifiers; switching diodes; small signal bipolar and pre-biased transistors; MOSFETs; thyristor surge protection devices; and transient voltage suppressors. It also provides analog products comprising power management devices consisting of AC-DC and DC-DC converters, USB power switches, and low dropout and linear voltage regulators; linear devices, such as operational amplifiers and comparators, current monitors, voltage references, and reset generators; LED lighting drivers; audio amplifiers; and sensor products, including hall-effect sensors and motor drivers. In addition, the company offers standard logic products comprising low-voltage complementary metal–oxide–semiconductor (CMOS) and high-speed CMOS devices; ultra-low power CMOS logic products and analog switches; multichip products and co-packaged discrete, analog, and mixed-signal silicon in miniature packages; silicon and silicon epitaxial wafers; and crystals and oscillators. It sells its products to the consumer electronics, computing, communications, industrial, and automotive markets through direct sales and marketing personnel, independent sales representatives, and distributors. Diodes Incorporated was founded in 1959 and is headquartered in Plano, Texas.

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