Critical Review: Xilinx (NASDAQ:XLNX) & NXP Semiconductors (NASDAQ:NXPI)

NXP Semiconductors (NASDAQ:NXPI) and Xilinx (NASDAQ:XLNX) are both large-cap computer and technology companies, but which is the better investment? We will compare the two businesses based on the strength of their valuation, risk, analyst recommendations, profitability, institutional ownership, dividends and earnings.

Analyst Recommendations

This is a summary of current ratings for NXP Semiconductors and Xilinx, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
NXP Semiconductors 0 6 13 1 2.75
Xilinx 0 12 11 0 2.48



NXP Semiconductors presently has a consensus target price of $104.74, suggesting a potential downside of 4.78%. Xilinx has a consensus target price of $118.50, suggesting a potential upside of 12.80%. Given Xilinx’s higher possible upside, analysts clearly believe Xilinx is more favorable than NXP Semiconductors.

Profitability

This table compares NXP Semiconductors and Xilinx’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
NXP Semiconductors 23.10% 22.22% 10.69%
Xilinx 29.19% 35.99% 18.42%

Volatility & Risk

NXP Semiconductors has a beta of 1.24, meaning that its share price is 24% more volatile than the S&P 500. Comparatively, Xilinx has a beta of 1.27, meaning that its share price is 27% more volatile than the S&P 500.

Valuation and Earnings

This table compares NXP Semiconductors and Xilinx’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
NXP Semiconductors $9.41 billion 3.84 $2.21 billion $5.94 18.52
Xilinx $3.06 billion 8.67 $889.75 million $3.48 30.19

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

Dividends

NXP Semiconductors pays an annual dividend of $1.00 per share and has a dividend yield of 0.9%. Xilinx pays an annual dividend of $1.48 per share and has a dividend yield of 1.4%. NXP Semiconductors pays out 16.8% of its earnings in the form of a dividend. Xilinx pays out 42.5% 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. Xilinx has increased its dividend for 8 consecutive years. Xilinx is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Institutional & Insider Ownership

75.0% of NXP Semiconductors shares are held by institutional investors. Comparatively, 85.1% of Xilinx shares are held by institutional investors. 0.2% of Xilinx shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Summary

Xilinx beats NXP Semiconductors on 11 of the 18 factors compared between the two stocks.

About NXP Semiconductors

NXP Semiconductors N.V., a semiconductor company, provides high performance mixed signal solutions for radio frequency (RF), analog, power management, interface, security, and digital processing products worldwide. The company offers products for audio and visual head-end unit applications, such as single-chip radio solutions, multi-standard radios, audio amplifiers and power analog products, and i.MX applications processors; in-vehicle networking products; two-way secure entry products; various sensors and microcontrollers; power management solutions; battery cell controllers; and solutions for radar, vision, vehicle-to-vehicle, and vehicle-to-infrastructure systems. It also provides secure identification solutions, such as passive RF connectivity devices; microcontroller devices; and secure real-time operating system software products to facilitate the encryption-decryption of data, and the interaction with the reader infrastructure systems. In addition, the company delivers semiconductor-based technologies for connected devices comprising microcontrollers, secure mobile transaction solutions, and various connectivity solutions; and offers digital networking processors, secure interface and system management products, high-performance RF power-amplifiers, and smart antennae solutions. Its product solutions are used in a range of application areas, including automotive, identification, wireless infrastructure, lighting, industrial, mobile, consumer, computing, and software solutions for mobile phones. The company markets its products to various original equipment manufacturers, original design manufacturers, contract manufacturers, and distributors. The company was formerly known as KASLION Acquisition B.V and changed its name to NXP Semiconductors N.V. in May 2010. NXP Semiconductors N.V. was founded in 2006 and is headquartered in Eindhoven, the Netherlands.

About Xilinx

Xilinx, Inc. designs and develops programmable devices and associated technologies worldwide. Its programmable devices comprise integrated circuits (ICs) in the form of programmable logic devices (PLDs), such as programmable system on chips, and three dimensional ICs; adaptive compute acceleration platform; software design tools to program the PLDs; software development environments and embedded platforms; targeted reference designs; printed circuit boards; and intellectual property (IP) core licenses covering Ethernet, memory controllers, Interlaken, and peripheral component interconnect express interfaces, as well as domain-specific IP in the areas of embedded, digital signal processing and connectivity, and market-specific IP cores. The company also offers development boards; development kits, including hardware, design tools, IP, and reference designs that are designed to streamline and accelerate the development of domain-specific and market-specific applications; and configuration products, such as one-time programmable and in-system programmable storage devices to configure field programmable gate arrays. In addition, it provides design, customer training, field engineering, and technical support services. The company offers its products to electronic equipment manufacturers in sub-segments, such as wireline and data center, wireless, aerospace and defense, test and measurement, industrial, scientific and medical, automotive, audio, video and broadcast, and consumer. Xilinx, Inc. sells its products through a network of independent distributors; and through direct sales to original equipment manufacturers and electronic manufacturing service providers, as well as independent sales representatives. The company has a strategic collaboration with ZF Friedrichshafen AG; and technology collaboration with Shenzhen Youjia Innovation Technology Co., Ltd. Xilinx, Inc. was founded in 1984 and is headquartered in San Jose, California.

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