Analyzing Renesas Electronics (OTCMKTS:RNECY) & Broadcom (NASDAQ:AVGO)

Broadcom (NASDAQ:AVGO) and Renesas Electronics (OTCMKTS:RNECY) are both computer and technology companies, but which is the superior investment? We will contrast the two companies based on the strength of their profitability, earnings, dividends, analyst recommendations, risk, valuation and institutional ownership.

Analyst Recommendations

This is a breakdown of current recommendations and price targets for Broadcom and Renesas Electronics, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Broadcom	0	1	26	0	2.96
Renesas Electronics	0	0	0	0	N/A

Broadcom currently has a consensus price target of $240.08, suggesting a potential upside of 44.31%. Given Broadcom’s higher probable upside, equities research analysts plainly believe Broadcom is more favorable than Renesas Electronics.

Profitability

This table compares Broadcom and Renesas Electronics’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Broadcom	24.10%	35.82%	13.41%
Renesas Electronics	N/A	N/A	N/A

Insider and Institutional Ownership

76.4% of Broadcom shares are owned by institutional investors. 2.0% of Broadcom shares are owned by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Dividends

Broadcom pays an annual dividend of $2.10 per share and has a dividend yield of 1.3%. Renesas Electronics pays an annual dividend of $0.11 per share and has a dividend yield of 1.3%. Broadcom pays out 9.0% of its earnings in the form of a dividend. Broadcom has raised its dividend for 14 consecutive years.

Valuation and Earnings

This table compares Broadcom and Renesas Electronics’ revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Broadcom	$42.62 billion	18.17	$14.08 billion	$23.25	7.16
Renesas Electronics	N/A	N/A	N/A	N/A	N/A

Broadcom has higher revenue and earnings than Renesas Electronics.

Summary

Broadcom beats Renesas Electronics on 9 of the 11 factors compared between the two stocks.

About Broadcom

Broadcom Inc. designs, develops, and supplies various semiconductor devices with a focus on complex digital and mixed signal complementary metal oxide semiconductor based devices and analog III-V based products worldwide. The company operates in two segments, Semiconductor Solutions and Infrastructure Software. It provides set-top box system-on-chips (SoCs); cable, digital subscriber line, and passive optical networking central office/consumer premise equipment SoCs; wireless local area network access point SoCs; Ethernet switching and routing custom silicon solutions; serializer/deserializer application specific integrated circuits; optical and copper, and physical layer devices; and fiber optic components and RF semiconductor devices. The company also offers RF front end modules and filter; Wi-Fi, Bluetooth, and global positioning system/global navigation satellite system SoCs; custom touch controllers; inductive charging; attached small computer system interface, and redundant array of independent disks controllers and adapters; peripheral component interconnect express; fiber channel host bus adapters; read channel based SoCs; custom flash controllers; preamplifiers; optocouplers, industrial fiber optics, and motion control encoders and subsystems; light emitting diode, ethernet PHYs, switch ICs, and camera microcontrollers. Its products are used in various applications, including enterprise and data center networking, home connectivity, set-top boxes, broadband access, telecommunication equipment, smartphones and base stations, data center servers and storage systems, factory automation, power generation and alternative energy systems, and electronic displays. Broadcom Inc. was founded in 1961 and is headquartered in Palo Alto, California.

About Renesas Electronics

Renesas Electronics Corporation researches, develops, designs, manufactures, sells, and services semiconductors in Japan, China, rest of Asia, Europe, North America, and internationally. The company operates through Automotive Business and Industrial/Infrastructure/IoT Business segments. It offers microcontrollers (MCUs) and microprocessors; amplifiers, audio and video, data converters, power line communication, and switches and multiplexer products; and specific clocks, clock distribution and generation, jitter attenuators with frequency translation, and crystal oscillator, and VersaClock programmable clocks. The company also provides buffers, haptic drivers, data compression, industrial Ethernet, IO-link line driver, memory interface, optical interconnect, photocouplers/optocouplers, power line communication, signal integrity, telecom datacom and interface, USB switches and hubs, and wireless connectivity products. In addition, it offers bus switches, first-in, first-out, memory interface, multi-port and SRAMs, non-volatile memory, and standard logic products; and AC/DC & isolated DC/DC converters, battery management, DC converters, digital power, discrete power devices, linear regulators, FET and motor drivers, multi-channel power management ICs, LED backlight drivers, solid state lighting, USB type-C, USB power delivery, and rapid charge, voltage references, and wireless power. Further, the company provides Automotive Radar Sensors, Industrial Radar Sensors, modulators and demodulators, phased array beamformers, transistor arrays, and variable gain amplifiers, as well as RF amplifiers, attenuators, mixers, switches, and synthesizers; and environmental, flow, industrial radar, optical, position, and automotive sensor products, as well as senor signal conditioners products. Additionally, it offers space and harsh environment products and wireless connectivity products. Renesas Electronics Corporation was incorporated in 2002 and is headquartered in Tokyo, Japan.