Critical Survey: MACOM Technology Solutions (NASDAQ:MTSI) versus Microchip Technology (NASDAQ:MCHP)

Microchip Technology (NASDAQ:MCHP) and MACOM Technology Solutions (NASDAQ:MTSI) 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 dividends, analyst recommendations, institutional ownership, risk, profitability, earnings and valuation.

Analyst Ratings

This is a breakdown of recent recommendations for Microchip Technology and MACOM Technology Solutions, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Microchip Technology	0	6	13	1	2.75
MACOM Technology Solutions	0	2	8	1	2.91

Microchip Technology currently has a consensus price target of $70.15, suggesting a potential downside of 0.89%. MACOM Technology Solutions has a consensus price target of $133.50, suggesting a potential downside of 6.14%. Given Microchip Technology’s higher possible upside, equities research analysts plainly believe Microchip Technology is more favorable than MACOM Technology Solutions.

Risk and Volatility

Microchip Technology has a beta of 1.48, indicating that its stock price is 48% more volatile than the S&P 500. Comparatively, MACOM Technology Solutions has a beta of 1.4, indicating that its stock price is 40% more volatile than the S&P 500.

Institutional and Insider Ownership

91.5% of Microchip Technology shares are held by institutional investors. Comparatively, 76.1% of MACOM Technology Solutions shares are held by institutional investors. 2.1% of Microchip Technology shares are held by company insiders. Comparatively, 16.3% of MACOM Technology Solutions shares are held by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock is poised for long-term growth.

Earnings & Valuation

This table compares Microchip Technology and MACOM Technology Solutions”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Microchip Technology	$4.40 billion	8.67	-$500,000.00	($0.01)	-7,078.00
MACOM Technology Solutions	$729.58 million	14.49	$76.86 million	($1.22)	-116.58

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

Profitability

This table compares Microchip Technology and MACOM Technology Solutions’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Microchip Technology	-0.01%	8.55%	3.53%
MACOM Technology Solutions	-10.24%	13.32%	8.41%

About Microchip Technology

Microchip Technology Incorporated engages in the development, manufacture, and sale of smart, connected, and secure embedded control solutions in the Americas, Europe, and Asia. The company offers general purpose 8-bit, 16-bit, and 32-bit mixed-signal microcontrollers; 32-bit embedded mixed-signal microprocessors; and specialized microcontrollers for automotive, industrial, computing, communications, lighting, power supplies, motor control, human machine interface, security, wired connectivity, and wireless connectivity applications. It also provides analog, interface, mixed signal, and timing products comprising power management, linear, mixed-signal, high-voltage, thermal management, discrete diodes, and metal oxide semiconductor field effect transistors (MOSFETS), radio frequency (RF), drivers, safety, security, timing, USB, Ethernet, wireless, and other interface products; field-programmable gate array (FPGA) products; and application development tools that enable system designers to program microcontroller, FPGA, and microprocessor products for specific applications. In addition, the company offers serial electrically erasable programmable read-only memory, serial flash memories, parallel flash memories, serial static random access memories, and serial electrically erasable random access memories for the production of very small footprint devices; and licenses its SuperFlash embedded flash and non-volatile memory technologies to foundries, integrated device manufacturers, and design partners for use in the manufacture of microcontroller products, gate array, RF, analog, and neuromorphic compute products that require embedded non-volatile memory, as well as provides engineering services. Further, it offers wafer foundry and assembly, and test subcontracting manufacturing services; and timing systems products, application specific integrated circuits, and aerospace products. The company was incorporated in 1989 and is headquartered in Chandler, Arizona.

About MACOM Technology Solutions

MACOM Technology Solutions Holdings, Inc., together with its subsidiaries, designs and manufactures analog semiconductor solutions for use in wireless and wireline applications across the radio frequency (RF), microwave, millimeter wave, and lightwave spectrum in the United States, China, Australia, Japan, Malaysia, Singapore, South Korea, Taiwan, Thailand, and internationally. The company offers a portfolio of standard and custom devices, including integrated circuits, multi-chip modules, diodes, amplifiers, switches and switch limiters, passive and active components, and subsystems. Its semiconductor products are electronic components that are incorporated in electronic systems, such as wireless base stations, high-capacity optical networks, radar, and medical systems and test and measurement applications. The company serves various markets comprising telecommunication that includes carrier infrastructure, which comprise long-haul/metro, 5G, and fiber-to-the-X/passive optical network; industrial and defense, including military and commercial radar, RF jammers, electronic countermeasures, and communication data links, as well as multi-market applications, such as industrial, medical, test and measurement, and scientific applications; and data centers. It sells its products through direct sales force, applications engineering staff, independent sales representatives, resellers, and distributors. The company was founded in 1950 and is headquartered in Lowell, Massachusetts.