SolarEdge Technologies (NASDAQ:SEDG) & Silicon Motion Technology (NASDAQ:SIMO) Critical Analysis

SolarEdge Technologies (NASDAQ:SEDG) and Silicon Motion Technology (NASDAQ:SIMO) are both mid-cap oils/energy companies, but which is the superior business? We will contrast the two businesses based on the strength of their earnings, analyst recommendations, dividends, valuation, risk, profitability and institutional ownership.

Earnings and Valuation

This table compares SolarEdge Technologies and Silicon Motion Technology’s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
SolarEdge Technologies	$2.98 billion	1.15	$34.33 million	$0.45	132.76
Silicon Motion Technology	$639.14 million	3.84	$52.87 million	$1.58	46.98

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

Profitability

This table compares SolarEdge Technologies and Silicon Motion Technology’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
SolarEdge Technologies	1.15%	5.00%	2.65%
Silicon Motion Technology	8.27%	7.01%	5.49%

Risk & Volatility

SolarEdge Technologies has a beta of 1.51, indicating that its share price is 51% more volatile than the S&P 500. Comparatively, Silicon Motion Technology 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 ratings and price targets for SolarEdge Technologies and Silicon Motion Technology, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
SolarEdge Technologies	3	21	6	0	2.10
Silicon Motion Technology	0	0	7	0	3.00

SolarEdge Technologies presently has a consensus price target of $98.81, suggesting a potential upside of 65.40%. Silicon Motion Technology has a consensus price target of $87.57, suggesting a potential upside of 17.97%. Given SolarEdge Technologies’ higher possible upside, equities research analysts plainly believe SolarEdge Technologies is more favorable than Silicon Motion Technology.

Insider and Institutional Ownership

95.1% of SolarEdge Technologies shares are owned by institutional investors. Comparatively, 78.0% of Silicon Motion Technology shares are owned by institutional investors. 1.2% of SolarEdge Technologies shares are owned by insiders. Comparatively, 5.3% of Silicon Motion Technology shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company is poised for long-term growth.

Summary

Silicon Motion Technology beats SolarEdge Technologies on 9 of the 14 factors compared between the two stocks.

About SolarEdge Technologies

SolarEdge Technologies, Inc., together with its subsidiaries, designs, develops, manufactures, and sells direct current (DC) optimized inverter systems for solar photovoltaic (PV) installations in the United States, Germany, the Netherlands, Italy, rest of Europe, and internationally. It operates in two segments, Solar and Energy Storage. The Solar segment offers power optimizers, inverters, batteries, storage solutions, electric vehicle chargers, smart tracking solutions, and smart energy management software products; Monitoring platform, a cloud-based monitoring platform, which collects power, voltage, current, and system data sent from inverters and power optimizers; and MySolarEdge app, that enables system owners to track their real-time system production and household energy consumption. This segment also provides Designer platform, an web-based tool that helps solar professionals to plan, build, and validate residential and commercial systems; Mapper application for registering the physical layout of new PV sites installed with DC optimized inverter systems; SetApp application that activates and configurate inverters; and grid services. The Energy Storage segment provides lithium-ion cells and containerized battery systems (BESS) solutions for commercial, industrial, and utility markets; modules and racks; purpose-built components and solutions, and hardware and software tools; and pre and post sales engineering support for designing, building, and managing battery and system solutions. The company offers e-mobility products, automated machines, and UPS products; and pre-sales support, ongoing trainings, and technical support and after installation services. It sells its products through solar installers and distributors, electrical equipment wholesalers, and PV module manufacturers, as well as engineering, procurement, and construction firms. SolarEdge Technologies, Inc. was incorporated in 2006 and is headquartered in Herzliya, Israel.

About Silicon Motion Technology

Silicon Motion Technology Corporation, together with its subsidiaries, designs, develops, and markets NAND flash controllers for solid-state storage devices. The company offers controllers for computing-grade solid state drives (SSDs), which are used in PCs and other client devices; enterprise-grade SSDs used in data centers; eMMC and UFS mobile embedded storage for use in smartphones and IoT devices; flash memory cards and flash drives for use in expandable storage; and specialized SSDs that are used in industrial, commercial, and automotive applications. It markets its controllers under the SMI brand; enterprise-grade SSDs under the Shannon Systems brand; and single-chip industrial-grade SSDs under the FerriSSD, Ferri-eMMC, and Ferri-UFS brands. The company markets and sells its products through direct sales personnel and independent electronics distributors to NAND flash makers, module makers, hyperscalers, and OEMs. It operates in Taiwan, the United States, Korea, China, Malaysia, Singapore, and internationally. The company was founded in 1995 and is based in Hong Kong, Hong Kong.