Critical Comparison: Advantest (ATEYY) and STMicroelectronics (STM)

STMicroelectronics (NYSE: STM) and Advantest (OTCMKTS:ATEYY) are both computer and technology companies, but which is the superior investment? We will compare the two businesses based on the strength of their analyst recommendations, dividends, profitability, valuation, earnings, institutional ownership and risk.

Volatility and Risk

STMicroelectronics has a beta of 0.79, suggesting that its share price is 21% less volatile than the S&P 500. Comparatively, Advantest has a beta of 0.67, suggesting that its share price is 33% less volatile than the S&P 500.

Valuation & Earnings

This table compares STMicroelectronics and Advantest’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
STMicroelectronics $8.35 billion 2.57 $802.00 million $0.98 24.41
Advantest $1.37 billion 3.26 $132.06 million $0.65 39.23

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

Dividends

STMicroelectronics pays an annual dividend of $0.20 per share and has a dividend yield of 0.8%. Advantest pays an annual dividend of $0.21 per share and has a dividend yield of 0.8%. STMicroelectronics pays out 20.4% of its earnings in the form of a dividend. Advantest pays out 32.3% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. STMicroelectronics is clearly the better dividend stock, given its higher yield and lower payout ratio.

Institutional & Insider Ownership

4.5% of STMicroelectronics shares are held by institutional investors. Comparatively, 0.0% of Advantest shares are held by institutional investors. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Profitability

This table compares STMicroelectronics and Advantest’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
STMicroelectronics 10.67% 19.45% 10.82%
Advantest 6.90% 10.68% 5.15%

Analyst Ratings

This is a breakdown of current ratings and recommmendations for STMicroelectronics and Advantest, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
STMicroelectronics 0 2 4 0 2.67
Advantest 0 0 0 0 N/A

STMicroelectronics currently has a consensus price target of $22.25, indicating a potential downside of 6.98%. Given STMicroelectronics’ higher probable upside, equities analysts plainly believe STMicroelectronics is more favorable than Advantest.

Summary

STMicroelectronics beats Advantest on 12 of the 14 factors compared between the two stocks.

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.

Advantest Company Profile

Advantest Corporation manufactures and sells semiconductor and component test system products and mechatronics-related products. It operates through Semiconductor and Component Test System; Mechatronics System; and Services, Support and Others segments. The Semiconductor and Component Test System segment provides customers with test system products for the semiconductor industry and the electronic parts industry. This segment offers test systems for SoC semiconductors for use in non-memory semiconductor devices; and test systems for memory semiconductors for use in memory semiconductor devices. The Mechatronics System segment provides test handlers; mechatronic-applied products for handling semiconductor devices; and device interfaces, which serve as interfaces with the devices that are measured. This segment also engages in the operations related to nano-technology products. The Services, Support and Others segment provides customer solutions for the semiconductor and component test system and mechatronics system segments; and support services. This segment is also involved in the equipment lease business and others. In addition, the company engages in research and development activities measuring and testing technologies; and sale of used products. Advantest Corporation serves fabless semiconductor companies, foundries, and test houses, as well as industrial, design, and manufacturing companies in Japan, Korea, the People's Republic of China, Taiwan, Singapore, the Americas, and Europe. The company was founded in 1954 and is headquartered in Tokyo, Japan.

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