Critical Survey: Mellanox Technologies (NASDAQ:MLNX) & Enphase Energy (NASDAQ:ENPH)

Mellanox Technologies (NASDAQ:MLNX) and Enphase Energy (NASDAQ:ENPH) are both mid-cap computer and technology companies, but which is the better business? We will contrast the two businesses based on the strength of their risk, valuation, profitability, earnings, analyst recommendations, institutional ownership and dividends.

Institutional and Insider Ownership

76.0% of Mellanox Technologies shares are held by institutional investors. Comparatively, 43.4% of Enphase Energy shares are held by institutional investors. 4.2% of Mellanox Technologies shares are held by company insiders. Comparatively, 12.5% of Enphase Energy shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company is poised for long-term growth.

Profitability

This table compares Mellanox Technologies and Enphase Energy’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Mellanox Technologies 14.09% 16.86% 13.63%
Enphase Energy 2.63% 31.17% 3.04%

Volatility & Risk

Mellanox Technologies has a beta of 0.48, indicating that its share price is 52% less volatile than the S&P 500. Comparatively, Enphase Energy has a beta of 0.85, indicating that its share price is 15% less volatile than the S&P 500.

Analyst Ratings

This is a breakdown of current recommendations for Mellanox Technologies and Enphase Energy, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Mellanox Technologies 0 7 1 0 2.13
Enphase Energy 1 2 8 0 2.64

Mellanox Technologies presently has a consensus target price of $119.19, indicating a potential upside of 7.61%. Enphase Energy has a consensus target price of $34.75, indicating a potential upside of 44.52%. Given Enphase Energy’s stronger consensus rating and higher probable upside, analysts plainly believe Enphase Energy is more favorable than Mellanox Technologies.

Earnings and Valuation

This table compares Mellanox Technologies and Enphase Energy’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Mellanox Technologies $1.09 billion 5.57 $134.26 million $3.85 28.77
Enphase Energy $316.16 million 9.28 -$11.63 million ($0.12) -200.38

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

Mellanox Technologies Company Profile

Mellanox Technologies, Ltd., a fabless semiconductor company, designs, manufactures, markets, and sells interconnect products and solutions. Its products facilitate data transmission between servers, storage systems, communications infrastructure equipment, and other embedded systems. The company offers InfiniBand solutions, including switch and gateway integrated circuits (ICs), adapter cards, cables, modules, and software, as well as switch, gateway, and long-haul systems; and Ethernet solutions, such as Ethernet switch products and Ethernet adapters for use in enterprise data center, high-performance computing, embedded environments, hyperscale, Web 2.0, and cloud data centers. It also provides adapters to server, storage, communications infrastructure, and embedded systems original equipment manufacturers (OEMs) as ICs or standard card form factors with PCI express interfaces; and switch ICs and systems to server, storage, communications infrastructure, and embedded systems OEMs to create switching equipment. In addition, the company supports server operating systems, including Linux, Windows, AIX, HPUX, Solaris, and VxWorks. It sells its products through its direct sales force, a network of sales representatives, and independent distributors. The company operates in the United States, China, Europe, rest of Americas, and rest of Asia. Mellanox Technologies, Ltd. was founded in 1999 and is headquartered in Sunnyvale, California.

Enphase Energy Company Profile

Enphase Energy, Inc., together with its subsidiaries, designs, develops, and sells home energy solutions for the solar photovoltaic industry in the United States and internationally. The company offers semiconductor-based microinverter that converts energy at the individual solar module level and combines with its proprietary networking and software technologies to provide energy monitoring and control services. It sells its solutions primarily to distributors, as well as directly to large installers, original equipment manufacturers, strategic partners, and homeowners. Enphase Energy, Inc. was founded in 2006 and is headquartered in Fremont, California.

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