Financial Review: Advantest (OTCMKTS:ATEYY) and Texas Instruments (NASDAQ:TXN)

Advantest (OTCMKTS:ATEYY) and Texas Instruments (NASDAQ:TXN) are both large-cap computer and technology companies, but which is the better business? We will compare the two businesses based on the strength of their analyst recommendations, dividends, earnings, risk, valuation, institutional ownership and profitability.

Volatility and Risk

Advantest has a beta of 1.2, suggesting that its stock price is 20% more volatile than the S&P 500. Comparatively, Texas Instruments has a beta of 1.04, suggesting that its stock price is 4% more volatile than the S&P 500.

Institutional & Insider Ownership

83.0% of Texas Instruments shares are owned by institutional investors. 0.6% of Texas Instruments shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Dividends

Advantest pays an annual dividend of $1.18 per share and has a dividend yield of 1.3%. Texas Instruments pays an annual dividend of $4.08 per share and has a dividend yield of 2.2%. Advantest pays out 35.5% of its earnings in the form of a dividend. Texas Instruments pays out 68.3% 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. Texas Instruments has raised its dividend for 17 consecutive years. Texas Instruments is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Profitability

This table compares Advantest and Texas Instruments’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Advantest 22.31% 28.26% 18.56%
Texas Instruments 40.04% 69.92% 33.09%

Analyst Ratings

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

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Advantest 0 1 2 0 2.67
Texas Instruments 4 6 17 0 2.48

Texas Instruments has a consensus price target of $190.79, indicating a potential upside of 1.49%. Given Texas Instruments’ higher probable upside, analysts clearly believe Texas Instruments is more favorable than Advantest.

Valuation & Earnings

This table compares Advantest and Texas Instruments’ revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Advantest $2.95 billion 5.98 $656.00 million $3.32 27.42
Texas Instruments $14.46 billion 12.01 $5.60 billion $5.97 31.49

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

Summary

Texas Instruments beats Advantest on 14 of the 17 factors compared between the two stocks.

Advantest Company Profile

Advantest Corporation manufactures and sells semiconductor and component test system products and mechatronics-related products. It operates through three segments: Semiconductor and Component Test System; Mechatronics System; and Services, Support and Others. 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 semiconductor devices; and test systems for memory semiconductors 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 sale of consumables and used products; and equipment lease business and others. In addition, the company engages in the research and development activities measuring and testing technologies. Advantest Corporation serves fabless semiconductor companies, foundries, and test houses, as well as industrial, design, and manufacturing companies in Japan, rest of Asia, the United States, and Europe. Advantest Corporation has collaboration with STMicroelectronics on advanced automated test cell for IC Testing; and partnership with PDF Solutions Inc. for cloud-based software solutions. The company was founded in 1954 and is headquartered in Tokyo, Japan.

Texas Instruments Company Profile

Texas Instruments Incorporated designs, manufactures, and sells semiconductors to electronics designers and manufacturers worldwide. It operates in two segments, Analog and Embedded Processing. The Analog segment offers power products to manage power requirements in various levels using battery management solutions, DC/DC switching regulators, AC/DC and isolated controllers and converters, power switches, linear regulators, voltage supervisors, voltage references, and lighting products. This segment also provides signal chain products that sense, condition, and measure signals to allow information to be transferred or converted for further processing and control for use in end markets, including amplifiers, data converters, interface products, motor drives, clocks, and sensing products.; and high volume products comprising integrated analog and standard products, which are primarily for sale into personal electronics, industrial, and automotive markets. The Embedded Processing segment offers connected microcontrollers, such as microcontrollers, microcontrollers with integrated wireless capabilities, and stand-alone wireless connectivity solutions that are used in electronic equipment; digital signal processors for mathematical computations; and applications processors for specific computing activity. This segment offers products for use in various markets, such as industrial, automotive, Personal electronics, communications equipment, enterprise systems, and calculators and other. The company also provides DLP products primarily for use in projectors to create high-definition images; calculators; and application-specific integrated circuits. Texas Instruments Incorporated markets and sells its semiconductor products through direct sales and distributors, as well as through its website. The company was founded in 1930 and is headquartered in Dallas, Texas.

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